Global investors set to throng India

WITH the government's recent move to allow 100 per cent FDI in the insurance/reinsurance broking sector, it is likely to see increased interest from overseas investors and this will benefit the market in the long term but one does hope that global buyers will have enough choice when it comes to the purchase of insurance/reinsurance.

Again, with the recent news of Anviti changing its name as Aon in the Indian market formally announces the arrival of the broking giant in market. On a global level the news of the Department of Justice further investigating the merger of Aon and WTW in the US, one wonders if the Competition Commission in India will consider the global developments as it is inevitable that the choice available for the reinsurance buyers in the Indian market will be negatively affected. Global consolidation may achieve economies of scale, but there is a point of diminishing marginal utility when the choice available for quality global services on large complex commercial business reduces just to two.

"The battle for position 3 is wide open and the market is seeing various players attempting to fill the gap such as Howdens, Gallagher's but the uncertainty of the Aon acquisition of JLT is far from over," Jay Thakker, principal officer and MD, Afro-Asian Insurance and Reinsurance Brokers, told Bizz Buzz.

London is also seeing a spate of new entrants such as Piiq Risk Partners, McGill Partners, OneGlobal and the like. The sector is likely to see some very interesting changes in the near future, he added. Given various relationships that Aon has in the Indian market with IRICS, KM Dastur and indeed their own operation and that of WTW's will diminish the choice that Indian clients have as far as global suppliers of the service are concerned.

There of course remains a lot of choice within the domestic market for such services. The global reinsurance market is afoot with changes following the Marsh acquisition of Jardine Lloyd Thompson earlier last year. The outcome of the European Union investigation meant that JLT had to quickly sell off the Aerospace Division to a third party (Gallagher's) to satisfy the regulator and eventually have approval for the acquisition. One wonders as to how many of such divisions will have to be sold off separately to keep the regulators happy or even if this will enable the transaction to go through?