Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Definitions
Interrelation between globalization process and insurance market
Trends
Conclusion
Bibliography
Definitions
Insurance Market: The insurance industry is a major component of the economy by virtue of
the amount of premiums it collects, the scale of its investment and, more fundamentally, the
essential social and economic role it plays by covering personal and business risks [3].
(Cambridge Dict.)The business of buying and selling insurance, and the companies that
are involved in it [4].
(Financial Times) According to the Financial Times Lexicon, the insurance market is simply
the "buying and selling of insurance." Consumers or groups buy insurance for risk
management from insurers offering coverage for specific risks [5].
Interrelation between globalization process
and insurance market
The notion of globalization denotes connections, integrity and interdependence in the world
covering economics, sociology, technology and the cultural, political and ecological spheres
of life. Globalization has been regarded as dealing with business, a particular approach in
organizing financial markets, and nowadays, even a procedure.
With competition comes greater challenges. Insurance companies now look beyond the local
market to acquire customers. In addition to a comprehensive suite of products, they strive to
give their brand an international outlook while paying attention to local context and cultural
sensitivities.
Globalization of the insurance and reinsurance business enables risk diversification and cost
reduction, but has become feasible only after liberalization and deregulation of the once
strongly protected sector. Many countries are moving away from protectionist policies and
state control towards a market approach, especially in the domain of insurance and other
financial services. In order to establish a stable, adequately managed and successful sector,
the governments strive to deregulate insurance, privatize publicly owned companies and open
markets to foreign companies.
Interrelation between globalization process
and insurance market
General Trends for the Global Insurance Industry: Since the 1990’s, the following trend have
been broadly experienced by the global insurance industry:
Concentration and centralization processes: formation of strategic alliances between
insurance and reinsurance companies; fusion of banks, insurance companies, and credit
companies to form transnational financial groups; mergers between small and medium
insurance companies to form large international insurance companies.
Modification to traditional forms and types of insurance services and new insurance products:
organizing insurance coverage through securitization; insurer participation in pension
insurance and reduced participation of governments in providing payment of old-age and
disability pensions; new insurances against political, military, security, and informational risks.
Change of market environments: Internet sales of insurance and reinsurance products;
insurances losses due to urbanization, climate change, and private property cost increases;
liberalization of state and supra-state regulations of financial and insurance markets.1
Trends
It is a well-known fact that risk management in insurance companies has been carried out through the
application of statistics and probability theory, while deviations from average values which occur as a result
of the change in economic conditions, social climate, environment effects, etc., compensate for dispersion
of risk over time, space, insurance type, etc. Thus, the spatial dispersion of risk creates the need for
international cooperation. Insurance companies offer international service in the form of risk insurance in
foreign countries or establish daughter companies abroad while setting up a subsidiary or acquisition of
foreign insurance company, which has become a more common practice nowadays.
In addition, globalization of insurance and reinsurance service has been initiated by the need for following
steady clients in their ambitious ventures worldwide as well as a constant search for increased profit, which
can be accomplished by means of the geographic spread of the insurance and reinsurance business.
Globalization of the insurance and reinsurance business enables risk diversification and cost reduction, but
has become feasible only after liberalization and deregulation of the once strongly protected sector [7].
Many countries are moving away from protectionist policies and state control towards a market approach,
especially in the domain of insurance and other financial services. In order to establish a stable, adequately
managed and successful sector, the governments strive to deregulate insurance, privatize publicly owned
companies and open markets to foreign companies. Demographic changes are the second important
reason for emerging multinational insurers and reinsurers. Globalization of the insurance and reinsurance
business depends on the challenges the insurers and reinsurers face on their local markets
Trends
The process of the globalization of insurance and reinsurance services combined with ever-growing
competition on the insurance and reinsurance market unavoidably leads to increased integration
of insurance and reinsurance companies. The process of consolidation, which means merging and
joining insurance and reinsurance companies, has been led by the desire to increase market
strength, decrease costs and develop economies of scale [6].
The growing consolidation of insurance and reinsurance companies is emerging as the
consequence of the fact that only a few of the large insurance groups will have available capital
sufficient to achieve global domination since new regulation, including the Sarbanes-Oxley Act in
the US and Solvency II in Europe, is going to allow more competitive positions for large insurance
companies in comparison with smaller ones; but only a few of them will be able to provide
adequate managerial skills to achieve success in all areas of insurance in a more open and
competitive environment.
The consolidation of insurance companies of non-life insurance unfolded slower than insurance
companies of life insurance, although the character of non-life insurance in its broadest sense is
more global than that of life insurance, especially with regard to determination of premiums in
liability insurance as well as capability of global risk distribution. There are a small number of large
insurance companies providing a wide range of insurance services to their corporate clients,
including services of global insurance of property and liability
Trends
1. https://en.oxforddictionaries.com/definition/globalization
2. https://dictionary.cambridge.org/dictionary/english/globalization
3. http://www.oecd.org/finance/insurance/globalinsurancemarkettrends.ht
m
4. https://dictionary.cambridge.org/dictionary/english/insurance-market
5. https://www.sapling.com/6850867/insurance-market-definition
Bibliography
6.https://www.researchgate.net/publication/227641049_The_Impact_of_Glo
balization_on_the_Insurance_and_Reinsurance_Market_of_Eastern_Europe
7. https://ideas.repec.org/a/vrs/seejeb/v5y2010i1p95-112n10.html
8. https://resources.elitetranslations.asia/2017/07/18/5-globalization-impacts-
insurance-markets/
9. https://www.degruyter.com/downloadpdf/j/jeb.2010.5.issue-1/v10033-010-
0010-7/v10033-010-0010-7.pdf