Globalisation of the Life and General Insurance Companies. A Cross Comparison Between UK and US Insurance Companies

In this article we compare the UK and the US insurance companies. According to the Association of British Insurers ABI, 2003/4, 806 insurance companies were authorised to carry on insurance business in the UK. In 2002, 592 of these are involved on doing general business and 160 were authorised for long-term business. There was an increase in the number of insurance companies in the general sector and a decrease in the life sector. Specifically, insurance companies in the general sector have increased gradually from 560 in 1983 to 592 in 2002. In contrast, in the life sector they have decreased from 214 in 1983 to 160 in 2002. Similarly, composite companies have decreased from 75 in 1983 to 54 in 2002. The largest ten US motor insurers occupy 87% of their business. The largest ten US property insurers account for 85% of their market share. The largest ten US life companies account for 68% of the market. In addition, general insurance business is related to high volatility of premiums, claims and earnings as a result of cyclical fluctuations in the economic activity of the country. According to Insurance Companies Market Report (2001), the industry has become very concentrated. In each of the individual segments of the general insurance sector, around ten companies account for more than 50% of the market. In some segments of the market, the percentage is much higher 60% or even 70%. This concentration has increased in recent years, as a result of the growing number of mergers and acquisitions. Among the key issues for the industry now are profitability and the future for annuities