Insurance to cover M&A risks is on the rise here: Aon Asia Pacific

Indian companies that have undertaken merger and acquisition (M&A) activity in the last few years have increasingly used insurance to hedge their bets but the country as a whole remains underpenetrated when it comes to using insurance in corporate deals, said Anne Corona, CEO – Asia Pacific at Aon, a professional services firm.

According to her, most M&As, particularly those with an international component, seek to protect some of it. “India is a growing and underserved market when it comes to insurance, and our clients are faced with increased volatility,” said Corona.

Aon, which primarily focused on hiring talent for India Inc, is now increasing its focus on bringing financial risk-mitigation products, including insurance, pension administration, and health-insurance plans, to the country.

The CEO said that more companies now use insurance to protect against certain inherent risks in an M&A transaction.

“Many Indian businesses, including those with a global presence, are considering options for growth, whether organic or via M&As. In the latter case, decision-making is particularly complex. Through our data and analytics capabilities, Aon is able to advise them on how to effectively identify, quantify and make decisions about risk for better transaction outcomes,” said Corona.

In the last two years, many Indian companies have also seen a jump in threats due to expansion on the digital front amidst the Covid pandemic.

“In the face of rapidly changing and challenging market conditions, companies need to address known and emerging risks such as cyber, intellectual property, ESG, and supply chain through data and analytics-driven solutions. They could access innovative and alternative forms of capital such as captives and catastrophe bonds,” said Corona.

The firm also competes with the Big Four firms – Deloitte, PwC, EY and KPMG – in some areas.

“Aon has broad relationships with the Big Four – we are partners, collaborators, and, in many instances, clients of one another. Aon not only provides advice to clients, but particularly around risk, we create solutions by providing access to capital,” said Corona.

She said that Indian companies are increasingly using more sophisticated financial products, many due to the increased risk appetite.

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