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The sooner insurance markets embrace the effects of globalization, the better are their chances in ensuring consistent growth in the face of this unstoppable force.In late November of 1999, about 35,000 people showed up in Seattle to protest the World Trade Organization’s Ministerial Conference. To borrow the words of Kofi Annan, the Former Secretary General of the United Nations, “It has been said that arguing against globalization is like arguing against the laws of gravity”, globalization has impacted every aspect of our lives and the insurance industry is not exempt from it. In the name of competition, insurance firms are putting in extra effort to provide better products and clearer communications driven towards meeting the expectations of both local and international customers. As customers get savvier and educated about insurance products, the need to gain their trust and build strong relationships becomes imperative to the top line. With globalization, there’s a renewed focus on customer satisfaction and trust. Economic growth in these countries has boosted affordability, allowing most consumers to go in for high-end insurance and investment-linked plans. Some countries are experiencing higher economic output due to globalization and international trade. They expect comprehensive coverage plans, low premium rates, and flexible policies. Consumers are not willing to make do with what was available anymore. Needless to say, this creates a demand for more products. Their knowledge of possible insurance and investment plans becomes richer. Increased Consumer Demand for InsuranceĪs more and more foreign insurance companies enter a local insurance market, customers’ awareness tends to grow. As the insurance industry starts embracing technological innovation and eCommerce, we’re also looking at more insurance products being sold via the Internet.
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Just as FinTech is changing the banking world, InsurTech is transforming the industry. For instance, we are seeing insurance products for newer risks such as informational risk, political risk, security risks, and even military risks. There’s a growth in the type of insurance services and products as well. Insurance companies are also beginning to experience centralization processes, thanks to partnerships with banks and reinsurance companies, and mergers with smaller or larger competitors. There are more people within the population who will be looking to sign up for insurance products, and thus more opportunities to do business. Globalization has also caused immigration numbers to rise. Wider globalization means more opportunities for overseas investments, and thus more investment-linked plans. For instance, more organized labor means more healthcare coverage for employees. There are also more opportunities for wealth creation and preservation. With globalization, consumers’ demands change and their needs become more varied.
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Today, a standard insurance firm doesn’t have to limit itself to a limited number of products or services. This has resulted in a plethora of opportunities for insurance companies. The thing about globalization is that it has caused other industries to expand as well. 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. Insurance companies now look beyond the local market to acquire customers. With competition comes greater challenges. This can range from improving coverage to reducing premiums. To sharpen the competitive edge, insurance firms have also tweaked their offerings to make them more tempting. After all, they now have the opportunity to choose from a range of products and services that are best suited to their individual requirements. Now, this is great news for the customer. How has globalization affected the insurance markets and insurance companies all over the world? Competition in the Insurance Marketsįirst and foremost, local insurance companies started facing more widespread competition – not only from within the country, but also from the region and from international conglomerates. It’s already here and it’s going to go further and wider. There’s no stopping the globalization train. 5 Impacts of Globalisation on Insurance Markets