Expansion in the European Union: new members diversify big trading bloc.The admission of 10 new member countries to the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community on May 1 has firmly established the EU as the world's largest developed insurance market. The economic and political alliance grew to 25 countries from 15 with the accession of eight former communist countries--Poland, Hungary, the Czech and Slovak Republics, the Baltic states Baltic states, the countries of Estonia, Latvia, and Lithuania, bordering on the eastern coast of the Baltic Sea. Formed in 1918, they remained independent republics until their involuntary incorporation in 1940 into the USSR. They regained their independence in Sept. and Slovenia--plus the island states of Malta and divided Cyprus. The expansion brings 75 million more people into Europe's single market for insurance, equivalent to adding the combined populations of New York, Texas New York is a hamlet in Henderson County, Texas, USA, about 11 miles east of Athens. Geography New York lies at the intersection of FM 804 and FM 607 in a stereotypically flat portion of East Texas, surrounded mostly by farm land. and California all at once. Under EU rules, insurers from any member state are free to operate in any other, based on the supervision of the home-state authority. The EU now has 450 million residents. In many of the new member countries, automobile third-party liability insurance has been among the first sectors to develop as governments make the coverage compulsory. All the new member countries meet the current EU requirements of coverage up to 350,000 euro (approximately $419,000) for bodily injury and 100,000 euro for physical damage. However, proposals are in the works to raise the minimum cover to 2 million euro, although the rules don't yet make it clear whether this minimum cover is per person, per event or some other formula. The former Soviet republics and satellite states have provided fertile ground for foreign insurers, especially those from Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . Lloyd's said May 7 that it has been authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the U.K regulator, the Financial Services Authority The Financial Services Authority ("FSA") is an independent non-departmental public body and quasi-judicial body that regulates the financial services industry in the United Kingdom. Its main office is based in Canary Wharf, London, with another office in Edinburgh. , to underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. insurance in Hungary and the other seven former communist countries that joined the EU on May 1. The following are brief profiles of the insurance markets in each of the new members of the EU: Poland is by far the largest of the EU's new member states, and its insurance market reflects its size. About 55% of gross premium in 2003 was for nonlife business, of which some 67% is related to automobile insurance. The Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. is the second largest of the new EU member countries, and its nonlife insurance market is relatively advanced. In the massive flood that inundated in·un·date tr.v. in·un·dat·ed, in·un·dat·ing, in·un·dates 1. To cover with water, especially floodwaters. 2. much of central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. in 2002, 53% of the economic loss in the Czech Republic was insured, compared with just 15% in Germany. Hungary has sold its insurance market to foreigners Foreigners alienage the condition of being an alien. androlepsy Law. the seizure of foreign subjects to enforce a claim for justice or other right against their nation. gypsyologist, gipsyologist Rare. . The market leaders are a who's who Who’s Who biographical dictionary of notable living people. [Am. Hist.: Hart, 922] See : Fame of the western European countries active in central Europe and the new member states of the EU. Slovenia, the former Yugoslav republic, is among the most developed insurance economies of the new EU countries. Take-up of nonlife insurance is high, local insurers are well developed, and premium growth has been stable. As a result, its development is on par with EU incumbents Greece and Portugal. Slovakia accounts for 7.2% of total insurance premium in the new members of the European Union. Foreign insurers dominate the Slovakian market, with all 10 of the largest players owned either fully or in part by foreigners. The European Union's expansion included the tiny island nations of Malta and Cyprus. However, only the southern, Greek part of Cyprus has been admitted, reflecting the continued division of the island between Greek and Turkish factions. Despite having only 1.5% of the population of the new EU countries, Malta and Cyprus are responsible for 4.9% of the group's premium in 2003. Lithuania is the largest of the three Baltic states that joined the EU May 1, but very nearly the poorest. Lithuania's insurance sector has bloomed late; it was the last of the EU's new members to make auto third-party liability mandatory. As Latvia entered the European Union, it had several insurers with a reasonable market share and a balance of local and foreign-owned companies. Including two companies in the Balta Insurance Group (a subsidiary of Codan Insurance of Denmark), Latvia has 13 nonlife insurers and six life companies. Estonia has moved enthusiastically to the West and given up its tiny insurance market almost entirely to foreign investors since emerging from the breakup breakup The division of a company into separate parts. The most famous breakup to date was the 1984 division of AT&T (formerly, American Telephone & Telegraph Company). This breakup was intended to increase competition in the communications industry. of the former Soviet Union.
10 Countries Join European Union
Insurance premium Population 2001:
Income (euro), 2003: (Thousands)
(1 euro = $1.26)* (Millions)
Premium
Country Income, 2003 Country Population
Poland 5,225.2 Poland 38,638
Czech Republic 3,211.2 Czech Republic 10,283
Hungary 2,140.8 Hungary 10,188
Slovenia 1,275.3 Slovak Republic 5,397
Slovak Republic 1,016.3 Lithuania 3,478
Cyprus 511.4 Latvia 2,355
Lithuania 236.0 Slovenia 1,992
Malta ** 185.0 Estonia 1,364
Latvia 182.8 Cyprus 762
Estonia 164.4 Malta 393
* As of Dec. 31, 2003
** 2002 premium figure.
Sources: Benfield, KUNiFE, LAA,
LRDPK, Finantsinspektsioon, Sava Re, European
Commission, Swiss Re, Insurance CQ of Cyprus, Comite Europeen des
Assurances, Lloyd's.
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