Globalization of insurance markets: Present situation and trends in the German market
The process of globalization is one of the major trends which the insurance industry is facing worldwide. However, at the same time, most of the markets for primary insurance have remained national markets. In a study published in 2010, the German Insurance Association (GDV) provided a detailed analysis of the contrast between increasing internationalization of primary insurance on the one hand and the continuing key importance of national particularities in most insurance markets on the other hand, using the example of the German insurance market and of foreign activities of German insurers.
The study shows that cross-border relations in the area of primary insurance have strongly increased over the last two decades. This becomes apparent, above all, from growing cross-border business via subsidiaries, the expansion of multinational insurance groups and the increasing international division of labour within these groups. By contrast, direct cross-border provision of insurance cover through branches or – within Europe – by way of freedom to provide services has only played a minor role so far. Due to important natural barriers to full market integration such as language or cultural particularities the majority of primary insurance markets, even within Europe, will probably retain their national character for the foreseeable future. However, in order to facilitate European and worldwide integration in primary insurance, consistent further development of the regulatory framework for cross-border activities in the primary insurance market is of particular importance and would further strengthen the efficiency and effectiveness of the private insurance industry worldwide.
An English summary of the main findings of the German-language study is available for download below.