INSURANCE MARKET OF UK & JAPAN

Comparative Case Study of the Insurance Market between UK & Japan

Table of Contents

Introduction3

Insurance Market Overview4

The UK4

Japan5

Insurance Providers5

Regulation7

Insurance Distribution9

Fraud10

Conclusion11

References12

Introduction

The significance of having knowledge of the international insurance markets cannot be denied. Having an adequate amount of knowledge can attract direct foreign investment in one's country. Absence of insurance coverage could also jeopardize the operations of the private commercial sector in both the countries. Besides, in both UK and Japan, insurance not only helps businesses save their costs, it also provides the holder a possibility of pursuing ventures he couldn't earlier due to the losses caused by absence of insurance in the face of an unfortunate event. According to a new research by IMAS Corporate Finance says that majority of the UK's general insurance companies are owned by foreigners; this makes it a good reason to explore this topic. (Friel, 2012) This topic is particularly interesting because having knowledge of the international insurance markets on a broader level would also help me realize the factors that affect the insurance business on a macroeconomic level, and the resultant dealing of insurance companies with individual and corporate consumers.

Two of the largest insurance industries in the world include UK and Japan industries. These make up for 7% and 14% (respectively) of the global premium earnings (ABI, 2012). Conversely, there are major differences between the two industries. The UK insurance is renowned in the global reinsurance market whereas the Japan insurance industry dominates. Differences are also present in regulations, fraud, insurance providing patterns, and insurance products' distribution. A few similarities exist as well, for instance, both the Japanese and UK industries are being regulated by the government.

Both the industries are facing critical challenges. The UK insurance market is affected by the negative reputation it holds amongst the general public. This was due to the banking crisis that happened recently. As for Japan, the industry got badly affected by 2011's tsunami; the reclaims were high and that spelled out a confirmed loss to the Japanese insurance companies.

Insurance Market Overview

The UK

United Kingdom's insurance industry is the leading insurance industry in the continent of Europe and is ranked as the 3rd largest in the world.

Source: (ABI, 2012)

As depicted in the figure, the only insurance sectors that beat the UK industry are those of Japan and the US. The UK industry had a share of 7% in the global premium income earned (ABI, 2012). Around 26% of the total net worth of UK is provided by this industry, and about 300,000 people are employed in this sector. The net investments make up a total of £1.8 trillion. Furthermore, businesses abroad are responsible for 30% of net premium income. Majority of the households in UK have motor/content insurance. Approximately 65% of this is covered by building insurance. Apart from that, life insurance, income protection insurance, personal pension, mortgage insurance and medical insurance contribute to smaller portions of the market (ABI, 2012). Insurance policies are also known to be complicated because even though several different kinds ...