Lloyd’s of London to apply for Malaysia onshore licence

PETALING JAYA: Lloyd’s of London – the world’s specialist insurance market – intends to apply for an onshore reinsurance licence in Malaysia, the UK and Malaysian Governments confirmed yesterday.

Lloyd’s said in a statement that the proposed new licence would enable it to increase the support it could offer in Malaysia.

The announcement that Lloyd’s will apply for a “Tier-1 licence” and open an office in Kuala Lumpur follows some months of discussions between Lloyd’s and the Malaysian authorities. Lloyd’s intends to submit an application shortly.

Lloyd’s is an important insurer and reinsurer in Malaysia, writing Malaysian business from London, Singapore and an offshore office in Labuan.

This new licence will give Lloyd’s a significant opportunity to develop its marine, energy, construction, engineering and liability business, as well as introduce new products to the market.

A Lloyd’s market presence will also support the development of the Malaysian specialist insurance industry through employment and education opportunities for local insurance professionals.

UK Prime Minister David Cameron said as a world leading insurance provider, Lloyd’s played an important role in protecting millions of people in the region from the financial losses of natural disasters.

“Lloyd’s ensures countries across Asia are protected, which helps to safeguard their economic success,” he said.

Prime Minister Datuk Seri Najib Tun Razak welcomed Lloyd’s decision to invest in Malaysia.

“As one of the world’s eminent insurers, Lloyd’s can contribute significantly to our specialist insurance industry. Lloyd’s decision to invest here demonstrates its confidence in our economy as well as reflects the increasing sophistication of risks in our businesses and industry,” Najib said.

Llyod’s chairman John Nelson said as part of the insurer’s Vision 2025, it had made a commitment to increase its support to the world’s fastest-growing economies.

“This new licence will enable Lloyd’s to strengthen our business relationships, deepen our understanding of the local risk landscape and offer new solutions to Malaysian businesses,” Nelson said.

According to the Financial Times (FT) on Thursday, the application for the licence is part of a broader push by the specialist insurer into Asia.

Asia bears half of the global economic cost of catastrophes, but has only roughly half the cover of other areas of the world.

FT quoted Nelson as saying that a licence would enable Lloyd’s to write more cover than the US$137mil of business it currently did via Singapore, London and Labuan – Malaysia’s offshore jurisdiction.

“If you have people on the ground, we get better access and a much better understanding of the risks,” he told FT.

“If we look at our performance around the world where we go onshore, our performance improves.”

Lloyd’s had paid out some US$850mil to Malaysian groups in recent years after the MH370 crash in March last year and the downing of MH17 over Ukraine in July and also the impact of the 2011 floods in Thailand on local businesses. The payouts were mostly the result of Lloyd’s reinsurance of locally written protection.

Asia accounts for about 12% of the group’s business.