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Thursday 4 December 2014

Foreign firms line up for Indian insurance broking

Despite a challenging business environment in the insurance broking industry, a lot of foreign brokerages are planning to enter the Indian market in the coming months.

On Wednesday, JLT, one of the world’s largest providers of insurance and reinsurance brokerage and associated services announced its entry into the Indian insurance broking business through a joint venture with the Sunidhi Group.

“India is a market, which no foreign players can ignore at the moment. There are many foreign broking firms that are planning to tap the Indian market. Our goal is to become one of the top five brokers in the country in another five years,” said Sanjay Radhakrishnan, chief executive officer of JLT Independent Insurance, which is holding a 26 per cent stake in the joint venture.

Currently, there are 343 registered insurance brokers in India. Out of these, five or six entities are joint ventures between a foreign broker and a domestic partner. According to the current regulation, a foreign partner is not allowed to hold more than 26 per cent stake in the insurance broking firm. Mr Radhakrishnan said that his firm is willing to increase its stake in the joint venture as and when the domestic regulation permits foreign investors to hold a higher stake.

While there is a proposal to allow 100 per cent FDI in insurance broking firm, Sohanlal Kadel, president of Insurance Brokers Association of India, said that his association would oppose any such move from the government.

The proposal, he said, would hit local players hard. “We are open to foreign players holding either 26 per cent or 49 per cent stake with management control with Indian. However, we will oppose any move to allow 100 per cent FDI in insurance broking industry,” Mr Kadel said.

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