Reducing protectionism in the insurance industry

With the privatization and liberalization policies that are pursued in many developing countries, this issue is gaining key importance. Without clear and unambiguous rules and an effective supervision of their application, there is a risk that the benefits expected from privatization and liberalization will not materialize. Market failures and the appearance of insurance suppliers with poor security should be averted through effective regulation and supervision. Care should be taken that appropriate rules and the institutions to secure their application accompany privatization and/or liberalization programmes.

Countries with competitive insurance markets may also want to overhaul and improve their regulatory and supervisory systems to increase market efficiency. Insurance regulation and supervision are dynamic elements of economic policy that have to be adapted constantly to changing requirements, perceptions and economic needs. Insurance legislation and control are in fact currently under discussion and review in many countries that feature a variety of insurance structures. This is the case even in countries with relatively advanced systems of supervision, as for example in the United States of America and the European Union. Developments in these countries can present interesting insights for developing countries planning to improve their own regulatory system.