Insurance and globalization [Archives:2005/896/Business & Economy]

November 21 2005


Insurance is one of the bases of any country's economy, it is equally important as trading facilitates, transportation, banking and information services, especially as we enter into the era of globalization.

Globalization gives priority only to open markets in achieving economic growth, governments have minimal interference in global trade and insurance even if the country is suffering from an economic recession such that of Japan in the end of the 20th century.

However, in the new global economy developing countries have expressed concern over the negative implications of globalization of trade and the non-restriction of services, therefore most developing countries began taking precautions in order to deal with these concerns, for example free of trade and services without any basis of fair competition may lead to the collapse of several industries in developing economies.

Therefore, international free trade and services without regulations will bring about social and economic challenges in these countries adding to their already existing ones.

One could wonder what has insurance to do with globalization and international trade relations, and what is the importance of these relations between various international companies? This has a direct relationship with strategies adopted by countries and companies in order to protect their industries, for example some companies have signed cooperation agreements and followed merger plans to face global competition, while others adopted strategic future plans to integrate their trade and services in the new global economy.

The Gulf countries as an example are combining their efforts to coordinate their insurance markets in order to create a unified gulf insurance system is by introducing unified insurance documents in addition to future plans of insurance.

This is a time of regional integration; it is not wise to enter the globalization era without a regional consolidation between countries and countries in the same regions and insurance companies are no exception and have no other alternatives. It is obvious that they should consolidate their cooperation in the one and same country, or else they will find themselves unable to face the global compeition.