In an attempt to leverage what the chief executive of its parent firm terms “a human capital advantage that is enduring”, Mercer Human Resource Consulting has said it plans to make India a hub for actuarial work related to its pensions and retirement products practice.
“India can be one of our hubs, it can be a really important player on the global basis in statistical retirement actuarial work,” Michael Cherkasky, president and CEO of Marsh & McLennan Companies, Inc. (MMC) said in late October.
Mercer is a part of MMC. Actuaries price insurance and pension products by assessing the risk attached to them.
MMC president and CEO Michael Cherkasky identifies India as one of its possible hubs and says the country can be a big global player in statistical retirement actuarial work
Cherkasky declined to disclose a timeline for Mercer’s plan to make India a hub for its retirement solutions business. “India is a long-term plan,” he said. He also denied that cost was a reason to want to put down an actuarial hub in India. India is unlikely to provide a long-term cost advantage for Mercer, Cherkasky added.
“There’s a human capital advantage (in India) that we think is enduring. We’re really focused on recruiting and plugging in to that,” he said.
However, Mercer’s plan to create a hub for its retirement business in India might take a while as there is currently a shortage of actuaries in the country. Demand for actuaries has risen after the government allowed private sector firms to operate in the insurance sector. Prior to that, openings for actuaries were largely limited to the five state-owned insurance companies.
Currently, there are 30 insurers operating in India and the number is expected to go up by around another 20 in the next few years, said Ravi Trivedy, executive director at audit and consulting firm KPMG. With the job market for actuaries expanding, there is a concurrent increase in supply as more people have begun to qualify as actuaries. “In three to four years, we should have a larger number of actuaries available in the country that should be able to satisfy the needs of insurance companies. Then, we should have some actuaries looking at other options,” Trivedy added.
MMC’s annual report for 2006 said Mercer’s retirement and investments business would use centres in “lower-cost markets domestically and abroad”. In the Asia-Pacific region, Mercer currently uses Australia as a hub to manage some of its investments. The company manages more than $10 billion (about Rs39,400 crore) of investments from Australia, Cherkasky said.
In 2006, Mercer’s retirements and investments business contributed around$1.17 billion to the company’s over $3 billion revenue. MMC has had to deal with regulatory issues in its home market —the US—on account of practices at its insurance brokerage, Marsh. This could hurt its profit for the year, company executives said at an investors’ conference earlier this year. Cherkasky said these issues would not affect MMC’s plans for markets such as India.