There’s no stopping the globalization train. It’s already here and it’s going to go further and wider. How has globalization affected the insurance markets and insurance companies all over the world?
Competition in the Insurance Markets
First 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. Now, this is great news for the customer. After all, they now have the opportunity to choose from a range of products and services that are best suited to their individual requirements.
To sharpen the competitive edge, insurance firms have also tweaked their offerings to make them more tempting. This can range from improving coverage to reducing premiums.
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.
Growth in Opportunities
The thing about globalization is that it has caused other industries to expand as well. This has resulted in a plethora of opportunities for insurance companies. Today, a standard insurance firm doesn’t have to limit itself to a limited number of products or services.
With globalization, consumers’ demands change and their needs become more varied. There are also more opportunities for wealth creation and preservation. For instance, more organized labor means more healthcare coverage for employees. Wider globalization means more opportunities for overseas investments, and thus more investment-linked plans.
Globalization has also caused immigration numbers to rise. There are more people within the population who will be looking to sign up for insurance products, and thus more opportunities to do business.
New Industry Trends in Insurance
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’s a growth in the type of insurance services and products as well. For instance, we are seeing insurance products for newer risks such as informational risk, political risk, security risks, and even military risks.
Just as FinTech is changing the banking world, InsurTech is transforming the industry. As the insurance industry starts embracing technological innovation and eCommerce, we’re also looking at more insurance products being sold via the Internet.
Increased Consumer Demand for Insurance
As more and more foreign insurance companies enter a local insurance market, customers’ awareness tends to grow. Their knowledge of possible insurance and investment plans becomes richer. Needless to say, this creates a demand for more products. Consumers are not willing to make do with what was available anymore. They expect comprehensive coverage plans, low premium rates, and flexible policies.
Some countries are experiencing higher economic output due to globalization and international trade. Economic growth in these countries has boosted affordability, allowing most consumers to go in for high-end insurance and investment-linked plans.
Increased Customer Satisfaction
With globalization, there’s a renewed focus on customer satisfaction and trust. 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. 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.
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. 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.