Introduction
What is liberalization?
Liberalization is relaxation of restrictions or barriers on the free exchange of goods between nations. Usually in social or economic policy. This area of reduction or removal includes both tariff (duties and surcharges) and non-tariff obstacles (such as licensing rules, quotas and other requirements). The easing or eradication of these restrictions is often referred to as promoting "free trade."
Component of liberalization include
• Industrial Liberalization
• Trade Liberalization
• Financial Liberalization
• Fiscal Sector Reform
Positive impact of liberalization to insurance sector
Foreign insurance companies can improve the efficiency of local insurance markets by providing superior customer services, introducing to new products and transfer technological and managerial know-how. Liberalization increases competition between company and encourages a more prominent specialty according to comparative advantages.
Role of foreign participation in promoting financial stability are important. it is also authoritative to facilitating the trade and commerce of developing economies. The availability of a consistent insurance sector has long been recognized as one of the basics in attracting foreign direct investment. Globally active industrial and service companies expect their insurers to follow them and provide worldwide support.
These positive considerations have reinforced the liberalization drive in developing markets but the pace of market opening is far from even as there are still concerns over the potential drawbacks of greater foreign participation.
Foreign insurers often have superior claims paying ability, which help to enhance the financial condition of individuals, households and...
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...potential economic benefits.
However, the overall, benefits developing markets stand to gain from opening up their insurance markets to foreign participation should more than offset any negative considerations. Provided that liberalization is being pursued against the backdrop of a solid set of prudent supervision, consumer protection and competition regulations as well as disclosure of information by the companies, the opening up of insurance markets should bring long-term benefits to developing markets.
Conclusion
Insurance industry is somehow negatively affected by liberalization. There are some benefit and some negative issue in the insurance company. Free trade can bring a lot of benefit to the industry in theory, but it also brought a lot of trouble in development. However liberalization is just the beginning and its need a lot of observation and research.
A simple comparison to the US system is difficult considering the multitude of insurance plans with variable premiums and the wide array of coverage depending on company size and other factors. Different from the French system, American employers do not buy insurance based on a percentage system and the money does not flow into a few National Health insurance funds, rather...
Free trade is a policy that lifts all trade tariffs and barriers and thus encouraging the free movement of goods (imports and exports) between nations. Agreements to free trade establish free markets where countries can engage in trade in a free and conducive environment. This type of trade is made possible by free trade agreements made between countries. According to the International Trade Administration, these agreements help minimize barriers to exports form the US, protect their interests as well as enhance the rule of law in member countries. NAFTA is one of such agreements.
Opportunities: at the 1980s, Canadian government changed the law to allowed foreign companies access in the Canadian market. (Narayanan, 2007). On the other hand, the regulation of the financial market was weakening as well, which means companies could have a mixed operation instead of separate operation between banking, trust, shares and insurance. Secondly,
Free trade was a political doctrine that emerged in the eighteenth century as opposed to then reigning mercantilism. Its basic premise is that the restrictions imposed by governments on the voluntary exchange of goods and services harm the economy
Economic freedom allows economic globalization to spread throughout the globe. The “government [had] been an important factor of globalization” (Issit 1), but today we live in a free market, it “allows producers and consumers to have economic decision making rather the government.” (Gerdes 50). As consumers want certain products, companies can expand to other countries allowing for the spread of economic globalization.
The Asia/Pacific market is a key opportunity for ING insurance. There is huge economic growth the Chinese and Indian markets therefore encouraging much investment in both countries. These investments came as two joint ventures in China as well as one in India and a high stake in a top Indian bank, Vysya Bank. ING dominates the markets in Australia/New Zealand, Taiwan, Malaysia, Hong Kong, Japan and Korea as well as investing in smaller markets such as Singapore and the Philippines. ING currently ranks within the top five financial providers in the Asia/Pacific region serving more than six million clients.
Some investors are wary about the process of investing internationally, carrying the concept that it is always to precarious and complex. While there are risks involved with international investing, there are also very beneficial and profitable reasons for doing so. Ev...
For the contrary the loading change (fee to cover the incurred administrative expenses) can be expensive. Also, the insurance sometime fails to meet demand providing limited protection, this insurance shortage can lead to ineffective insurance regulations. As well as, for consumer with minimum loss experience, their premium will be high, because their probability of loss is high.
Free trade can be defined as the free access to the market by individuals without any restriction or any trade barriers that can obstruct the trade process such as taxes, tariffs and import quotas. Free trade in its own way unites and brings people together. Most individuals love the concept of free trade because it gives them the ability to move freely and interact with the market. The whole idea of free trade is that it lowers the price of goods and services by promoting competition. Domestic producers will no longer be able to rely on government law and other forms of assistance, including quotas, which essentially force citizens to buy from them.
Monks, A., & Stringa, M. (2005). Inter-industry linkages between UK life insurers and UK banks: An event study. Financial Stability Review, 127-134.
Free trade, interchange of commodities across political frontiers without restrictions such as tariffs, quotas, or foreign exchange controls. This economic policy contrasts with protectionist policies that use such restrictions to protect or stimulate domestic industries. In this article I will discuss the positive and negative effects of free trade. Trade can lead to an improvement in overall economic welfare if countries specialize in the products in which they have a production advantage. Trade allows businesses to exploit economies of scale by operating in international markets. International competition stimulates higher efficiency and reduces monopoly power. Trade enhances consumer choice and international competition between suppliers helps to keep prices down. Trade in ideas stimulates product and process innovations that generates better products for consumers and enhances the overall standard of living.
...MENT ENCOURAGEMENT OF GLOBAL BUSINESS FOREIGN GOVERNMENT ENCOURAGEMENT Governments also encourage foreign investment. The most important reason to encourage investment is to accelerate the development of an economy. An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry. US GOVENRMENT ENCOURAEMENT The US government is motivated for economic as well as political reasons to encourage American firms to seek opportunities in the countries worldwide. It seeks to create a favorable climate for overseas business by providing the assistance by providing the assistance that helps minimize some of the troublesome politically motivated financial risks of doing business abroad.
Tussie, D., & Aggio, C. (n.d.). Economic and social impacts of trade liberalization. Retrieved from http://www.unctad.info/upload/TAB/docs/TechCooperation/fullreport-version14nov-p106-119.pdf
Sun Life has established a wide range of risk management controls to manage credit risks. Income and regulatory capital sensitivities are monitored, controlled and reported against their pre-established risk limits. Due to the nature of insurance products, investment diversification is needed to match their various liabilities. Investment limits are defined at Sun Life, which include asset class, geography and industry limits. Use of credit quality ratings
The global economy has seen a dramatic increase in services trade between countries. The regulation and monitoring of service trade between countries has become much harder. As highlighted by Johnson, trading in services was the fastest growing constituent of global trade during the 80’s and 90’s. Cross border transactions include anything from banking to software. When services are offered to another country, the provider has to interact with the customer through either, cross border communications, movement of the provider or the consumer moving to the supplier’s state of residence. Technology has made international trade much easier and more feasible; this has lead countries to boost services being exported to other countries. IT has decreased the cost of communication between countries. As a result it has made it more feasible for businesses to introduce new products and modify services abroad. This spark in global trade of services has its downfalls. The liberalization of services goes against certain countries’ development strategies. Areas like health and education needs the provisional planning of governments. The interference from abroad has hindered the governments’ strategic planning with respect to these services. This takes us to the importance of regulating services coming in from abroad through protectionism. Regulations on services can be a burden on service providers which can consequently weaken the liberalization of tr...