M Saraswathy & Tarun Sharma Moneycontrol News
UK-based insurance broker Aon may have exited India a year ago but it has, in a manner that could sit right in the middle of a regulatory grey area, found a way to have its international clients serviced in the country.
In a confidential email, Aon Global Senior Managing Director Bruce Wineman told senior employees that the company had brought on Bengaluru-based Anviti as a "service partner" for clients who want to have their risks serviced in India.
Backed by Narayana Murthy's Catamaran Ventures, Anviti Insurance Brokers launched composite insurance broking services in India in January 2018.
An insurance broker acts as an intermediary between an insurance company and a client. It helps the client get the most appropriate product for their needs at the right price.
In the email, Aon's MD makes it clear that the company "has not entered a formal correspondent broker arrangement" with Anviti but the communication outlines various ways in which the company's clients could deal with Anviti, should they choose to do so, as well as the role Aon will play in such an engagement.
Moneycontrol has seen a copy of the email.
As per insurance regulations in India, a registered reinsurance or composite broker can utilise the services of a foreign broker for placement of reinsurance with insurers or reinsurers outside India. However, this service is only for reinsurance business placement.
As per the note that Aon sent to its clients, it has said that Aon staff (from abroad) can also visit the client or any insurer in India with an Anviti personnel. Further, they can also assist Anviti's clients in India including client presentations and submissions to underwriters. However, they have clarified in the note that documents will be issued by Anviti, even if prepared with Aon's support.
Moneycontrol sent a detailed questionnaire to Aon and Anviti seeking clarification on the nature of their relationship. Aon refused to comment while Anviti did not respond.
In 2017, insurance broking major Aon split from Global Insurance Brokers with which it had a joint venture called Aon Global where it held 26 percent stake. This decision was announced in 2015 and Aon had cited 'regulatory changes' as the reason for this decision.
Around the same time, in February 2016, Aon had announced that it has entered into an agreement with Catamaran to establish a new broking joint venture in India. However, the deal could not materialise due to some objections raised by the insurance regulator.
According to the Insurance Regulatory and Development Authority of India (IRDAI) broking regulations, any insurance broker operating in the market is required to have a certificate of registration from the regulator. Also, every Insurance broker granted Certificate of Registration is be governed by ‘Indian owned and controlled’ requirements of the Insurance Laws (Amendment) Act 2015.
In the note, Aon said that it cannot receive a share of the commission that Anviti receives for direct insurance placements. But it can receive fees for specific services rendered to Anviti as per the terms of business.
"Aon is committed to India a strategic market for the Asia business. We believe India has tremendous near and long-term economic potential and we remain committed to support the growth of the market...," Aon wrote.
Anviti specialises in segments like health and benefits, property and business interruption, liability, marine, energy and infrastructure, crisis management, reinsurance as well as servicing international clients.
Several global insurance companies have taken a wait-and-watch approach to entering the Indian market after the Insurance Act was amended in 2015.
The Act not only gave substantially higher rights to the Indian shareholders, it prevents pre-determined pricing for valuation of companies. Only fair market pricing can be used.
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