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KUALA LUMPUR, MalaysiaLloyd's of London has launched Lloyd's Labuan Ltd., its new subsidiary in Malaysia. The Labuan Malaysia domiciled subsidiary will give Lloyd's greater access to the Malaysian reinsurance market.
Under the Malaysian regulatory regime, insurers and brokers seeking reinsurance coverage must first approach licensed reinsurers on mainland Malaysia. If they are unable to obtain adequate coverage among the "first tier"of reinsurers they can then approach reinsurers licensed in Malaysia's offshore island, Labuan. Failing that they may approach the "third tier" of reinsurers, non-Malaysian licensed reinsurers in the surplus lines market.
Previously Lloyd's had operated in Malaysia as a "third tier" reinsurer, but with the opening of Lloyd's Labuan Ltd. it has upgraded its license and will operate in the second tier.
Opening the Labuan company, Lloyd's Chairman, Lord Peter Levene said that Lloyd's Malaysian reinsurance business totaled around $70 million last year and is expected to reach $100 million by 2010.The Lloyd's chairman also said that there are business opportunities in the retakaful sector, and that Lloyd's could become an attractive platform for capital providers wishing to invest in this area.
Takaful insurance is a form of mutual insurance that is acceptable under Islamic or Shari'ah law, and retakaful is reinsurance of that cover.
According to Lord Levene, Lloyd's has carried out some initial work in this sector, but that extensive analysis of legal, tax and regulatory implications is required to take it to the next stage.
Lord Levene said the size and importance of Asia's insurance markets is starting to "soar." "Although everyone is talking about China right now, the Association of Southeast Asian Nations countries also represent a fast-growing market which the insurance market cannot ignore, and Malaysia is a key economy at the heart of the region," he added.