|Copyright:||(c) 2010 A.M. Best Company, Inc.|
|Source:||A.M. Best Company, Inc.|
The rise of
“As an economist, I see that a new global order has been established in terms of where insurance growth is likely to be achieved in the years ahead,” Hartwig said. His remarks came in an interview and in his address to the
In 10 years, Hartwig expects the share of world insurance premiums written in what are called the emerging markets to rise to about 30%, from about 15% today. Forces that had taken shape before the onset of the current international economic crisis will increasingly make themselves felt, he said.
“Virtually all of the growth in the global insurance and reinsurance business is going to be achieved in a relatively small number of emerging markets,” he said.
This growth will be accompanied by greater risk than if it had occurred in the West, Hartwig said.
Many of these areas suffer from political instability and offer risks that can be expected to get worse before they get better, while underwriters will have to understand political factors, Hartwig said.
“Ultimately, however, greater prosperity in these countries could lead to greater economic stability and quite sound market conditions for insurers and reinsurers in the long run,” Hartwig said.
Hartwig warned the audience that the current global downturn will make it more difficult for the insurance sector to achieve long-term growth. “We had a reshuffling of the global economic debt,” he said.
In his speech, Hartwig pointed to the promotion of government austerity in
Hartwig also noted fears about both inflation and deflation and the prospect of trade and currency disputes. A trade war, would be bad for the global insurance market, he said.
“Each increment of growth that we see in this [the insurance] industry going forward is going to be accompanied by a larger increment of instability than we would have seen in the past,” he said.
Hartwig sees the evolution of “a whole new political dynamic” as new centers of influence take shape in such regions as
Hartwig’s advice to underwriters seeking to prosper in this new environment is: persevere, even though growth may have fallen short of expectations. Success may depend on the ability do business with Chinese business partners in a third country, he suggested.
“You are dealing with two very different ways of doing business and a lot of political dynamics that quite frankly have yet to emerge,” Hartwig said.
Insurance clients in these markets may have to be convinced that they need the insurance products that are being offered to them, Hartwig said. They might have to be instructed, for instance, in such subjects as U.S. tort law or the intricacies of directors and officers cover.
Hartwig said the growth of
To hear the full interview with