Services firm Towers Watson is stepping up the rollout of out its benefits brokerage business across Asia Pacific this year as it continues to diversify.
The firm, which serves as investment consultant to the region’s institutional investors, announced yesterday it had established an employee benefits brokerage in Korea.
This is a segment of growing importance for Towers Watson in both Europe and Asia, where it accounts for a growing proportion of revenue*, notes Andrew Heard, managing director for Asia-Pacific benefits.
“We already provide these services in the US and we are rolling them out in Europe and Asia,” he told AsianInvestor. “Being a new player in this space, it is not 100% clear what our market share will be. But the benefits segment will be a material amount of revenue for us [in Asia].”
Towers Watson Insurance Brokers Korea becomes the firm’s latest unit in Asia to help multinationals with the costs of providing employee benefits, specifically insurance – with medical inflation at more than 10% in Korea, notes Heard.
This entity helps domestic and global firms – largely corporates, although it is open to any firm with a headcount – to find insurance terms for staff as well as help with health intervention programmes (which involve getting individuals to improve their diet and take more exercise). Towers Watson gets paid by receiving commissions from insurance firms.
The new business will be headed by Chang Hee-Cho, director of health and group benefits for South Korea.
“What clients are telling us is they want greater global governance,” said Heard. “We are responding by broadening our services.”
AsianInvestor has previously reported how Towers Watson has sought to expand its business model to include an educational service for Hong Kong citizens, MPFexpress.com magazine and website.
At that time Naomi Denning, the consultancy’s Asia-Pacific managing director, explained that its aim was to help corporates to help individuals.
Heard noted that Towers Watson had launched its benefits brokerage business more than a decade ago in Hong Kong, and last year received licences in both Singapore and Manila.
He added that it plans to launch units across Asia Pacific this year subject to regulatory approval, listing India, Indonesia, Japan, Malaysia, Taiwan, Thailand and Vietnam. This week it is set to announce a joint venture with broker Metis in India.
In accordance with domestic regulations, Heard said he anticipates it will take a few years to get a similar business off the ground in mainland China.
*Towers Watsons’ total revenues for the first quarter of fiscal 2015 were $878 million, of which the benefits segment accounted for 53% at $466 million, an 8% year-on-year increase. The segment had a net operating income (NOI) of 33%.
By comparison, risk and financial services accounted for $148 million in revenues (17%), a year-on-year rise of 4% with an NOI margin of 24%.
The remainder of its revenues came from talent and rewards (17%) and exchange solutions (10%), excluding reimbursable expenses and other.