Printer Friendly

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 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, or the 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 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, 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 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.
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.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:in the insurance industry
Comment:Global Market Has Room For Large and Niche Players.(in the insurance industry)
Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:Mar 1, 2001
Previous Article:Equity Split-Dollar Life Policies Are Taxable Income, IRS Says.
Next Article:Malaysian Bank Chief Outlines Challenges of New Markets.

Related Articles
Facing the future: Cost controls, customer service, niche marketing and integrated financial services head the list of strategic concerns for life...
Deleting the risk: Hackers invading corporate Web sites by using more sophisticated techniques fuel the market for cyber-risk insurance. (Cyber-Risk:...
Classic-car enthusiasts are driving niche market. (Property/Casualty: Marketplace).
Insurers focus on specialty markets. (E-Fusion Conference: Retail; Technology).
Rites of passage: Australia and New Zealand are often viewed as the gateway to larger markets in Asia, but insurers have to overcome problems in...
Quiet clout: much of the power in regulating and governing the insurance industry belongs to those who've never won an election or a cabinet-level...
Serving the underserved: Tuscarora-Wayne Mutual Insurance Co.'s small size allows for tighter coordination and a more personal touch. (Market...
Study: life industry could top $1.6 trillion.
Private equity eyes insurance: investments in the insurance industry are booming as investors flush with capital look for new ways to invest it.
Healthy shrinkage: the number of U.S. life insurance companies has fallen over the past decade by nearly half, a change that is probably for the...

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters