With the size of world's population reaching gigantic proportions, global insurance is also gaining in stature. Private as well government insurance agencies around the world are running for insuring lives of millions (and in the process insuring their own businesses more). In fact, the insurance industry is a key component of the world economy today owing to its premiums, its investment and, above all, the social and economic role it plays in covering personal and business risks.
To illustrate the steady growth in the global insurance industry in recent times, in 2004, global insurance premiums grew by 9.7% to reach $3.3 trillion (as against the 11.7% growth in 2003). While life insurance premiums grew by 9.8% during the year due to rising demand for annuity and pension products, non-life insurance premiums grew by 9.4%.
The developed nations/economies account for the bulk of the affluence in global insurance industry. North America (with two of the major developed countries in the world, viz., Canada and the USA) has been one of the most important regions, followed by the EU and Japan as far as the global insurance industry goes. The United States and Japan alone account for a half of world insurance, which is much higher than their share of the global population. The volume of UK insurance business totaled $295bn in 2004 (9.1% of global premiums). The emerging markets, on the other hand, although account for more than 85% of the world's population, but they generate only 10% of premiums.
Financial viability of insurance companies
However, although the insurance industry is a flourishing in world economy today, one need to keep in mind that financial viability/stability of the insurance company is a major consideration at the time of purchasing insurance contract. The viability factor is important because many a times, an insurance premium paid currently provides coverage for losses in distant future and there are instances where a number of insurance companies have gone insolvent, thus leaving their policyholders with little helpful or no coverage. Therefore, even if the global industry is strengthening more and more, the weak links are also co-existent and blind faith can lead to a severe downfall. There are also independent rating agencies for insurance companies which could be helpful in providing sound information on financial viability of various insurance companies.
For more information on global insurance, please refer to www.mapsofwoprld.com .
