KUALA LUMPUR: Lloyd’s of London will be expanding its insurance and reinsurance operations in Malaysia in the first quarter of next year, said chairman John Nelson.
Through an onshore Tier 1 licence, the specialist insurance and reinsurance player wants to take advantage of Malaysia’s raised risk profile and the low insurance penetration rate of 1.8 per cent.
“We believe if Lloyds comes in on a reinsurance basis, we are providing the backdrop for the Malaysian insurance industry to increase the penetration rate, complementing and filling the gap on the risks they can write,” he said at a media briefing, here, yesterday.
Lloyd’s currently serves the Malaysian market as a Tier 2 reinsurer through its Labuan service companies and as a cross-border reinsurer from London and Singapore.
It is in “advanced” stage of discussions with Bank Negara Malaysia and will announce the outcome within two months.
“Operations are likely to begin in Kuala Lumpur in the first quarter of next year with two to three managing agents,” said Nelson.
He pointed out that the Malaysian economy’s “extraordinary” growth track over the past decade proved that it was robust, diversified and had a high degree of industrialisation and commercialisation, backed by a large pool of talented people.
“Malaysia is increasing the volume of risks as business and commercial communities grow.”
The London-based company, which has 100 syndicates, writes about US$140 million (RM579 million) of offshore insurance for Malaysia.
“Under the new licence, Lloyds will build on its marine, energy, construction, engineering and liability offerings in Malaysia,” said Nelson.
Lloyd’s also sees the potential for Malaysia to develop as a commercial takaful/retakaful market.
In a study four years ago, the company placed Malaysia on of the list of potential markets. Discussions with Bank Negara commenced following former British prime minister David Cameron’s visit here last year.
Lloyd’s research published in 2012 shows that a one per cent rise in insurance penetration translates to a 13 per cent reduction in uninsured losses, 22 per cent reduction in taxpayers’ contribution following a disaster and increased investment equivalent to two per cent.
Lloyds has hubs in Singapore, and Shanghai and Beijing in China, apart from the Middle East and Latin America.
From marine cargo, the 328-year-old company is now big in emerging risks in aviation, among others.