Capacity providers target India as capital looks for more stable home

An increasing number of capacity providers are targeting India as they look to expand their footprint in the Asia Pacific region, according to Aon’s John Morley.

Morley, who serves as Asia Pacific CEO within Aon’s Strategy and Technology Group, told The Insurer the broker had been working with a number of clients looking to expand into India over the past 12 months.

Morley said factors such as the re-election of Narendra Modi as prime minister as well as business-friendly policies and de-regulation have helped attract new entrants to the Indian market.

“There is some degree of stability in India now, which will help further attract new capital,” he said.

“In contrast, the Chinese economy has been coming off the boil, with enhanced political risk, both through tensions with Taiwan and factors such as the outcome of the US election and what that might mean for relations.

“With everyone a bit less sure on China, India has become an alternative. Aon has also recently acquired a brokerage in India, expanding our own footprint,” he continued.

“India is just one example. There are also areas such as Vietnam and Cambodia in Southeast Asia that are developing very quickly.

“As these insurance markets mature, more business is written within those countries with less wholesale fac going into Singapore. As a result, the shape of the market changes.”

One country where further changes are expected is Japan as companies begin to unwind cross-shareholdings, a practice where one publicly traded company holds a significant number of the outstanding shares of another publicly traded company.

“The end of this practice will see an outflow of capital. Japan’s major insurers are already exposed in Europe but are potentially underweight in North America, so could look to target US and Bermudian companies,” Morley said.