European Union
Single-Market Laws Add Competition
Europe's insurance market today is more competitive, offering buyers a greater range of products at cheaper prices and better service, as a result of single market insurance legislation enacted in 1994.
The effects of a series of insurance directives, which took effect in the European Union just more than three years ago are beginning to be seen in the marketplace in the form of greater competition in national markets and the selling of new insurance products.
The Non-life Insurance Directives issued in1994 has put in place the basic framework for a single market throughout the European Union for all types of insurance coverage. Effective July 1, 1994, the package of directives introduced a single system for the authorization and financial supervision of an insurance company by the member states in which the insurer has its head office.
This provides insurance companies with a "European passport" enabling them to carry on insurance business throughout the European Union as long as they are regulated in one E.U.member state. The directives also required member states to abolish controls on premiums and rates and prior approval of policy conditions.
The effect of the E.U. regulatory liberalization is most marked in those national markets that, before the inception of the single license regime, were characterized by strict controls over insurance policies and tariffs and a reluctance to introduce innovatory insurance products.
Larger insurance companies are increasingly offering pan European policies, particularly for multinational companies.
Meanwhile, the number of companies that have notified their intention to provide insurance services throughout the European Union from a base in another member state has increased, which will increase over time as the single market develops further.
The E.U.'s single insurance market is the third-largest insurance market in the world, accounting for 25.4% of world's premium volume.
The largest is the United States, with a 30.8% share, followed by Japan, with 30%.
In 1996, 4,800 insurance-related companies were present in the European Union, employing nearly 1 million people. Global premiums were valued at 455 billion European Currency Units ($566.5 billion), or 7.1% of the gross domestic product of the combined E.U. member states.
However, large price differentials still exist between member states for several reasons.
This partly is due to different national characteristics-such as life expectancy, lifestyle habits, cultural differences and differing compensation levels-and because the trend toward increased competition following liberalization is only beginning to trickle down to buyers in the marketplace.
Single-Market Laws Add Competition
Europe's insurance market today is more competitive, offering buyers a greater range of products at cheaper prices and better service, as a result of single market insurance legislation enacted in 1994.
The effects of a series of insurance directives, which took effect in the European Union just more than three years ago are beginning to be seen in the marketplace in the form of greater competition in national markets and the selling of new insurance products.
The Non-life Insurance Directives issued in1994 has put in place the basic framework for a single market throughout the European Union for all types of insurance coverage. Effective July 1, 1994, the package of directives introduced a single system for the authorization and financial supervision of an insurance company by the member states in which the insurer has its head office.
This provides insurance companies with a "European passport" enabling them to carry on insurance business throughout the European Union as long as they are regulated in one E.U.member state. The directives also required member states to abolish controls on premiums and rates and prior approval of policy conditions.
The effect of the E.U. regulatory liberalization is most marked in those national markets that, before the inception of the single license regime, were characterized by strict controls over insurance policies and tariffs and a reluctance to introduce innovatory insurance products.
Larger insurance companies are increasingly offering pan European policies, particularly for multinational companies.
Meanwhile, the number of companies that have notified their intention to provide insurance services throughout the European Union from a base in another member state has increased, which will increase over time as the single market develops further.
The E.U.'s single insurance market is the third-largest insurance market in the world, accounting for 25.4% of world's premium volume.
The largest is the United States, with a 30.8% share, followed by Japan, with 30%.
In 1996, 4,800 insurance-related companies were present in the European Union, employing nearly 1 million people. Global premiums were valued at 455 billion European Currency Units ($566.5 billion), or 7.1% of the gross domestic product of the combined E.U. member states.
However, large price differentials still exist between member states for several reasons.
This partly is due to different national characteristics-such as life expectancy, lifestyle habits, cultural differences and differing compensation levels-and because the trend toward increased competition following liberalization is only beginning to trickle down to buyers in the marketplace.