Swiss Re sees India commercial insurance as key growth opportunity

Mumbai: Swiss Re is entering India’s direct commercial insurance market for the first time, after more than 25 years as only a reinsurer, as the Swiss giant looks to tap growing demand from Indian companies.

The move centres on a partnership entered with Bajaj General Insurance in August. The two companies will offer risk-management solutions and international insurance programmes to Indian corporations—with an initial focus on Indian companies expanding internationally, Ivan Gonzalez, chief executive of Swiss Re Corporate Solutions, said in an interview with Mint.

The opportunity is significant, Gonzalez said. He pegged the global commercial insurance market at around $80 billion, with India currently accounting for less than 10% of it — a gap he wants to close. Separately, he said Swiss Re wants its own India business to eventually make up about 10% of its global portfolio, in line with India’s economic weight.

“Insurance is highly co-related to the economy. If India is one of the top 10 largest economies in the world, we would like our business in India from a portfolio construction to be approximately 10%. That’s not where we are at the moment,” he said.

“We see a very big opportunity to support Indian corporations,” Gonzalez said. “There is a growing number of Indian corporates that are expanding abroad, and they need a partner that can protect them in these countries.”

Swiss Re Corporate Solutions is one of the three business units of Swiss Re, the other two being property and casualty reinsurance, and life and health reinsurance. The Corporate Solutions unit accounts for around 20% of Swiss Re’s business.

While the expansion by Indian companies was initially concentrated in export-oriented countries, more manufacturing companies are now expanding and setting up factories overseas, Gonzalez said.

Swiss Re’s priority lines of business in India include property and energy, engineering and construction, and credit and surety. Geographically, its immediate focus is on West Asia and South-East Asia, followed by Europe, with sector-specific opportunities in Africa, the US and Canada.

Bajaj General partnership

The partnership with Bajaj General is intended to address the growing risk-management needs of Indian corporations, both in India and overseas, Gonzalez said. Bajaj General’s local knowledge and history, combined with Swiss Re’s technical expertise, will allow the companies to jointly develop these solutions, he added.

“We support Bajaj with technical expertise, technology in terms of our multinational platform, but also with capital and capacity,” Gonzalez said. Swiss Re will deploy a significant amount of capital in India “as some of these opportunities arise,” he added, without giving details.

The partnership addresses a gap in the market, Gonzalez said, as only about five of India’s insurers have the capabilities to offer such international programmes because of the complexities involved and differences in tax regimes, which a lot of insurers do not have the capabilities and capital to navigate.

Swiss Re has also announced a similar partnership in Mexico, and has a partnership in Brazil. “That’s what we concluded, that in some geographies, being alone is not as attractive as being with a good partner,” Gonzalez said, adding that the plan includes bringing in Swiss Re talent to operate in India and eventually to also have Bajaj provide support to them outside of India.

Changing risk landscape

The need for newer insurance solutions is being driven by a changing risk landscape and the need for tailor-made international programmes to help corporations navigate a “very complex environment” that factors in interconnected risks such as supply-chain disruptions, geopolitics, energy dynamics and the growth of artificial intelligence, Gonzalez said.

“There are a number of competitors in this space, but we think that few have those capabilities. The penetration of parametric solutions in India is still at low single digits of
of the total market. We expect that over time that should develop in to higher single digits,” Gonzalez said. The company is also in discussions with the government on Centre-sponsored insurance schemes, he added.

Another area of focus is data centre construction, where the scale of investment and sophistication of the technology and assets are creating demand for higher-ticket and more customized insurance covers.

“The capital and the capacity that is required is very high given the asset values of these data centres. So, we have very established environmental, sustainability and governance-related policies where we take many of these topics into consideration,” he said.