India operation scaled back after problems with regulation.
Lloyd’s has let its lead representative in India go as part of measures to scale-back its commitments in the country, which it claims is making it difficult for overseas companies to operate.
Lloyd’s hit out at India’s red-tape culture after it experienced repetitive obstacles to obtaining a licence, essential to tapping the republic’s booming economy and growing consumer class.
A Lloyd’s spokesman said: “We are scaling down the level of representation in India due to lack of progress”. She added that two junior representatives will remain in the Mumbai office.
Steps to partially cut ties with India represent a turnaround from last year, when Lloyd’s said in a report, entitled India 2010: A Lloyd’s View, that opportunities in the Indian market were “too significant to overlook”.
Aon’s India desk director, Kavita Pandey, questioned Lloyd’s decision to withdraw resources from India and suggested that the regulatory situation might improve after next year’s election.
Pandey said: “Investors need a long term view because the current government is likely to lose next year’s election. India’s Congress is quite progressive but unfortunately the left wing government has succeeded in presenting road-blocks and barriers to Congressional reform policies.”
The possibility of a reformist backlash next year may reward Munich and Swiss Re’s resolute commitment to Indian markets, she said, particularly because local players could collectively absorb just $650m (£330m) of large utility project risks, such as coal, oil and gas projects.
According to last year’s Lloyd’s report, India’s insurance sector is expected to report $11.6bn in insurance premium in 2010.
Of this potential profit, Lloyd’s earned just $135m in 2006.
Pandey said India’s growing consumer class had tried to drive economic growth to become second only to China. This posed significant opportunities amid softening markets and continued profit reductions at home..