Globalization of insurance industry

Abstract

The article investigates the influence of globalization on insurance industry which reduced amount of national insurance companies and increased foreign branches in three Baltic countries and in Slovenia. Analysis of statistic data on concentration level showed the trend of growing competition between insurance companies of countries investigated. Insurance contributes significantly to economic growth by improving the investment climate and promoting efficient mix of activities of economy than would be undertaken in the absence of risk management instruments. From other side economic growth and wealth are the most important determinants for insurance market growth and penetration. In this paper, the authors investigate the insurance density and penetration in dependence of economic growth and globalization in three Baltic countries: Lithuania, Latvia, Estonia and Slovenia. The findings of the paper show that level of economic growth and demand of insurance services in all states varies: the insurance density in Lithuania last year was at 1,6 %, while the average cost of insurance per capita was 204 euros. Latvian insurance market penetration and density was respectively 1,5 % and 185 euros, Estonian – 1,7 % and 259 euros, Slovenian - 5,1% and 920 euros, while the average penetration and density in the EU countries of Central and Eastern European region was 2,6 % and 334 euros. This reflects the ongoing different impact of globalization on their insurance markets, due to changes in security traditions, appearance of new insurance types and financial literacy of the population.