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Member, Beacon International Group, Ltd.
MUMBAI, IndiaThomas Hess, chief economist at Swiss Reinsurance Co., in Zurich, Switzerland, says that he expects a consolidation in the Indian insurance industry after tariffs are removed at the beginning of next year.
Mr. Hess said that the long-awaited detariffing of the Indian market will trigger a shake-out in the market that will make it more difficult for smaller companies to survive.
Mr. Hess said that premiums will be more volatile, demand for capital support will increase from primary companies and profits will come under pressure.
The economist said that after the tariffs are removed, prices and underwriting profits will fall.
He added that in the short to medium term, the most "needy" buyers will probably find coverage difficult to find as the market realigns itself, and insurance companies focus on improving technical pricing, data quality and the introduction of internal controls.