Bear-hit stock brokers shift to insurance broking

Bear-hit stock brokers shift to insurance broking
Religare, Edelweiss, Emkay, India Infoline Set Up Insurance Broking Subsidiaries To Escape Adverse Market Conditions
IN A clear bid to insulate themselves from the vagaries of the stock market and offer a basket of financial products to their clients, some stock brokers have got into the insurance broking business. Brokers like Religare, Anand Rathi, Edelweiss, Emkay and India Infoline have set up insurance broking arms, through which they sell both life and non-life insurance products of several companies. While an insurance agent typically can sell products of only one insurance company, an insurance broker can sell products of multiple insurance companies. In India, insurance broking picked up only a couple of years ago, due to stringent norms which made it necessary for the brokers to have a capital of at least Rs 50 lakhs. Besides this, the business needs to be conducted in a separate company, it should have a different office other than the broking office and it should have separate set of employees. Religare Insurance Broking already has 1,300 people on its rolls and it generated premium worth Rs 107 crores for the year ended March 2008. “We aim to expand the business five fold to Rs 500 crore of premium by March 2009,” said Chandan Sinha, president, Religare Insurance Broking. The company has 57 branches across the country, which are in addition to the stock broking branches. Anand Rathi has a team of 100 people with 15 offices across the country. Insurance broking is not easy as one has to interact with as many as 25 different companies for selling products, which could be a daunting task. Besides, training a sales force to sell multiple products is a big challenge, say analysts. However, in a bid to give the best deal to a customer, it is imperative to be an insurance broker. “Insurance (life and non-life) is unaffected by the vagaries of the stock market and it helps derisk the business model,” says Sharekhan senior vice-president, P Saravanan. Sharekhan was till recently a corporate agent of ICICI Prudential Life Insurance. Plans to get into insurance broking in a couple of months are on the anvil, he adds. “Insurance is a sticky business. If I can help my clients in getting the motor claims or mediclaims, I can cross sell other products too,” says Supriya Rathi, principal officer and director, Anand Rathi Insurance Brokers. They generated a premium of Rs 80 crore last year. “The process is currently at a nascent stage. With more value addition, clients realise that the benefits will be manifold and growth will be faster,” says Akhilesh K Singh, head of wealth management, Emkay Shares. With markets falling by about 6,000 points from the peak of January 2008, insurance broking seems to offer a ray of hope. At present, we have about 250 insurance brokers in the country. The biggest in the business are Aon and Marsh, both multinational companies who are also into reinsurance.

Source: Economic Times Mumbai