Emerging market countries represent huge, untapped opportunities for insurers. But carriers that are not properly staffed with people who understand the cultures, histories and markets of these nations will not succeed in their efforts to expand.
So said former AIG CEO Maurice “Hank” Greenberg during the keynote presentation of the 23rd annual Executive Conference, an event hosted by Ernst & Young and Summit Business Media at the Crowne Plaza Times Square hotel in New York City on Dec. 6. Now Chairman and CEO of Starr Insurance Holdings, Greenberg explored ways in which life and P&C insurers can capitalize on emerging insurance markets.
“To succeed, insurers have to have people on staff who understand these emerging markets and capital to spare to fund a potentially long adjustment time,” Greenberg said. “And you have to understand the risks involved. It takes more courage to enter an emerging market than a fully developed and regulated one.”
One issue, he noted, is variability of the risks to be insured. Example: the risk of insuring business executives or commercial property in politically unstable countries, where the pricing of such risks will be different than in mature and less volatile countries.
Another issue is differences in regulations. Growing countries in Latin America, he said, offer insurers significant opportunities for overseas expansion. But adapting to the wide differences in rules and legislation governing carriers and producers can be a big challenge.
Greenberg noted, too, that globalization offers not only market opportunities for U.S.-based insurers, but also those based overseas. Case-in-point: Chinese-based carriers, which now are among the companies (in terms of market capitalization) in Asia.