Global Market Has Room For Large and Niche Players.The period of megamergers in the insurance industry may be ending, and the future market will be polarized A one-way direction of a signal or the molecules within a material pointing in one direction. between big international and niche players, although consolidation will remain an issue, said Gerry Dickinson, vice secretary of the International Association for the Study of Insurance Economics Insurance Economics is a research programme set up by the Geneva Association, also known as the International Association for the Study of Insurance Economics. It is dedicated to making an original contribution to the progress of insurance through promoting studies of the , or the Geneva Geneva, canton and city, Switzerland
Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. Association.
"Do we need any more consolidation? We're coming to a point where we've had a significant number of very large players...basically, the job is now to make those acquisitions work and make the benefits come through," Dickinson said.
Small and midsize companies will have to adapt to this environment by providing niche products, rather than competing against the large groups on the traditional grounds of product, customers and geography, said Dickinson, an insurance professor at City University London.
By contrast, the commercial non-life portion of the industry needs to be concerned with the growth of alternative risk transfer. There is a danger of ART becoming more important' than conventional means." This, in turn, raises sensitive regulatory issues that require governments to re-regulate their markets, he said, citing capital adequacy as a case in point. "They have to rethink re·think
tr. & intr.v. re·thought , re·think·ing, re·thinks
To reconsider (something) or to involve oneself in reconsideration.
re acceptable sources of capital for insurance companies; that's the solution," he added later.
While the role of the very large insurance groups is important, Dickinson said it depends on the sector.
"With reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , there is a case for mega-reinsurers," he said in the interview, explaining that it was "indisputable with very, very large risks, the law of large numbers Law of large numbers
The mean of a random sample approaches the mean (expected value) of the population as sample size increases. applies."
By contrast, he said, "the case for mergers between large commercial banks and large insurance companies is not proven." One qualification, he added, was that such mergers might be possible between smaller players within emerging markets.