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Local Insurers Have Edge Over Globalizing Giants.


Insurance companies in emerging markets have some comparative advantages that allow them to mitigate mit·i·gate
v.
To moderate in force or intensity.



miti·gation n.
 the major problems resulting from globalization globalization

Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation
, an industry observer said.

A recurring re·cur  
intr.v. re·curred, re·cur·ring, re·curs
1. To happen, come up, or show up again or repeatedly.

2. To return to one's attention or memory.

3. To return in thought or discourse.
 asset for insurers in emerging markets is local knowledge, which confers a distinct advantage, said Patrick Goergen of the insurance unit at the United Nation Conference on Trade and Development.

The local knowledge that insurers have includes consumer habits, statistics on loss experience, court rulings, established networks with the authorities and other insurers and an in-depth understanding of the local labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience  for potential recruitment, Goergen said.

He argued that local insurers are more likely to establish and maintain personal links with holders of large books of various types of business.

The new competitive environment created by globalization "requires adaptation" as well as a set of new skills, Goergen said. The new milieu mi·lieu
n. pl. mi·lieus or mi·lieux
1. The totality of one's surroundings; an environment.

2. The social setting of a mental patient.



milieu

[Fr.] surroundings, environment.
 is marked by a change from producer-oriented to consumer-oriented attitudes.

Extending the domestic market base involves developing new markets and products--especially niche prod-pursuing mergers and acquisitions, he said. Outside the home country, he suggested alliances and the establishment of branches and subsidiaries. "Be innovative in your distribution channels," he said.

On capital issues, he admitted there were substantial difficulties, especially on the investment side. "But one area which is often forgotten is to improve underwriting Underwriting

1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).

2. The process of issuing insurance policies.
 results and investment returns."
COPYRIGHT 2001 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Comment:Local Insurers Have Edge Over Globalizing Giants.
Publication:Best's Review
Article Type:Brief Article
Geographic Code:00WOR
Date:Mar 1, 2001
Words:218
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