Overseas scenario

Catastrophe insurance:
Although general insurers cover themselves through re-insurance, the problem arising out of the frequency and severity of natural catastrophes worldwide could perpetrate financial ruin in non-life markets. This problem is particularly aggravated because catastrophe insurance is either not available in all markets, or, available at a prohibitive price. A continuing concern in many non life markets is insurer solvency. Steps have been taken in the European Union to reduce the probability of insurer failure by increasing solvency margins. In the US, the relatively low minimum capitalisation rules of various states have been augmented by risk-based capital requirements., where each insurer has a unique minimum capital requirement based on its particular portfolio of asset risks, credit risks, loss reserve risks and premium risks.

The US market:
The US non life market is the world’s largest, with a global marketshare of 41.5 per cent. The size and complexity of the risks in the US demand a great deal from the capacity and expertise of insurers and re-insurers there. The US property and liability insurance market consists of over 2000 risk-bearing entities, which results in a low level of market concentration.

Direct marketing:
Direct marketing has been a major success in Europe, which is the world’s second largest market with a 31 per cent marketshare. Telemarketing of auto and homeowners insurance has been a huge success within a short period, with several direct marketers registering a rising share of the mass risks market.

Maturity refund in Japan: A unique feature of Japanese insurance policies is the maturity refund feature found in many dwelling and personal accident policies. A saving element allows a refund of 10 per cent of the premiums paid over a ten year period if there are no losses. In addition, a dividend may be paid on the actual yield of premiums paid.

Public sector domination: Picc is a state insurer in China which dominates the market even after liberalisation. In recent years, Ping An and China Pacific, two other public sector players, have made inroads into the Chinese insurance markets.