Insurance broking in India

Shubha Madhukar
11 September 2004

Neil Mathews, CEO of Aon Global, part of the $9.8-billion Aon Corporation, outlines his company's business plans in India. 

Aon Global, a joint venture between Chicago-based Aon Corporation (turnover in 2003 : $9.8 billion) with operations in 120 countries and Global Insurance Services, was the first multinational in India to get a composite broking licence in March 2003. It began operations in July 2003 and has a combined budget (reinsurance and direct broking) from brokerage revenue in excess of $4 million. Neil Mathews, CEO, Aon Global, talks about broking in India, Aon's business plans and what it hopes to achieve in a detariffed regime, which is expected to begin from April 1, 2006. Interviewed by Shubha Madhukar.

Insurance broking is a new concept in India. What is the need for an insurance broking company?
In the past 50 years, insurance has been done the old-fashioned way In India. As a result, there was no opportunity to evolve new products, new services and new ways of deliveries. The evolution of those trends and products in, say, Singapore, Hong Kong, New York or London was totally lacking in this market. The liberalisation and entry of brokers has created the catalyst to rapidly change and catch up with rest of the world.

How do customers benefit from brokers?
Unlike earlier, people now have several choices, which can be confusing. The professional broker earns by adding value to the customers. He can access products from every single insurer unlike agents who are tied to one company. The broker's role is first to understand the customer's needs, the complexity of it and the solutions required. Taking an insurance policy is just one solution to a range of requirements a client faces.

Since the products are regulated by law and cannot be changed, how does the client benefit?
In India there is a limiting factor because we have something called tariff. The ability of a broker to customise a product in these specifications is very limited because there is very little a broker can do to change the parameters or pricing of those products to suit your business needs. Tariff is very inflexible and inefficient.