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    Globalization of Insurance Need For Globalization: C H A P T e R 6

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    Pranav Vira
    The document discusses the globalization of the insurance industry and its impact on India. Globally, the insurance market totals $2.3 trillion split between life and non-life insurance, with London as a major center. Japan and the U.S. are the largest markets. Industry consolidation, rather than new companies, is driving growth. The internet is also becoming an important global distribution channel. India represents a huge growth opportunity as its markets develop. Liberalizing India's insurance sector allows foreign insurers to enter the market and brings opportunities like increased investment and competition. However, there are also threats like capital flight, foreign insurers dominating certain markets, and loss of domestic ownership control.

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    Globalization of Insurance Need For Globalization: C H A P T e R 6

    Uploaded by

    Pranav Vira
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    The document discusses the globalization of the insurance industry and its impact on India. Globally, the insurance market totals $2.3 trillion split between life and non-life insurance, with London as a major center. Japan and the U.S. are the largest markets. Industry consolidation, rather than new companies, is driving growth. The internet is also becoming an important global distribution channel. India represents a huge growth opportunity as its markets develop. Liberalizing India's insurance sector allows foreign insurers to enter the market and brings opportunities like increased investment and competition. However, there are also threats like capital flight, foreign insurers dominating certain markets, and loss of domestic ownership control.

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    The document discusses the globalization of the insurance industry and its impact on India. Globally, the insurance market totals $2.3 trillion split between life and non-life insurance, with London as a major center. Japan and the U.S. are the largest markets. Industry consolidation, rather than new companies, is driving growth. The internet is also becoming an important global distribution channel. India represents a huge growth opportunity as its markets develop. Liberalizing India's insurance sector allows foreign insurers to enter the market and brings opportunities like increased investment and competition. However, there are also threats like capital flight, foreign insurers dominating certain markets, and loss of domestic ownership control.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    54 views2 pages

    Globalization of Insurance Need For Globalization: C H A P T e R 6

    Uploaded by

    Pranav Vira
    The document discusses the globalization of the insurance industry and its impact on India. Globally, the insurance market totals $2.3 trillion split between life and non-life insurance, with London as a major center. Japan and the U.S. are the largest markets. Industry consolidation, rather than new companies, is driving growth. The internet is also becoming an important global distribution channel. India represents a huge growth opportunity as its markets develop. Liberalizing India's insurance sector allows foreign insurers to enter the market and brings opportunities like increased investment and competition. However, there are also threats like capital flight, foreign insurers dominating certain markets, and loss of domestic ownership control.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Chapter 6

    Globalization of Insurance

    Need for Globalization


    • Reduction in Transaction Costs

    • Creating Liquidity

    • Facilitating Economies of Scale in Investment

    Global Picture of Insurance


    • The world market stands at approximately US$2.3 trillion in insurance premiums,
    split equally between life and non-life insurance, with London continuing to dominate
    as a major supply centre

    • In terms of demand, Japan and the U.S.A. are still the largest insurance markets,
    accounting for over 70 percent of global premiums

    • For non-life, penetration world-wide averages 3.3 percent of GDP and is highest in
    the U.S.A. (almost 5 percent) due to the importance of private health and liability
    insurance

    Global Insurance Markets – Current Scenario


    • Insurance Companies are developing primarily from industry consolidation rather
    than the growth of new companies or increased overseas branching

    • Mergers and acquisitions are especially prevalent in markets where there have been
    a large number of undifferentiated players, none of which have controlled more than
    five percent of the market

    • Internet is the growing as a global distribution channel world-wide, which is


    increasingly being used for marketing of insurance products and services

    Globalization and Its Impact on India


    • India’s developing markets afford huge opportunities for growth, surpassing anything
    available in the West

    • India and Korea are the two last countries in Asia to deregulate their financial sectors
    • Liberalization of the insurance sectors has allowed foreign insurers to enter the
    market

    • For a developing country like India, growth in per capita GNP and education levels
    brings an increase in demand for life insurance products

    Impact of Globalization of Insurance Sector on India-


    Opportunities
    • Opening up of the sector will ensure a large flow of funds in two ways. More
    investment will take place in the sector and further through competition

    • After the nuclear tests, the government needs to hold out a hand of friendship to
    the West to achieve aims related to national security. Insurance will be a visible
    gesture

    • From the view point of the capital markets, opening up of the insurance will have
    a bullish impact

    • The biggest benefit will be to the stock market because of the actual investment
    flowing into infrastructure development

    • The opening up of the insurance sector by the Government of India to private


    and global players

    Impact of Globalization of Insurance Sector on India-


    Threats
    • There is a fear that there will be a flight of capital from India; to ensure against
    this we should stipulate that capital and dividend repatriation should start only
    after some years. It is also necessary to ensure that domestic capital raised
    through premium is not repatriated

    • The other fear is that the foreign insurers will cream the market

    • The biggest fear is ownership, that is foreign insurers do not control the
    management of the insurance company through backdoor

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