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SESSION 22. Reinsurance, Insurance, Foreign Aid, and Economic Development

22. Reinsurance, Insurance, Foreign Aid, and Economic Development.

Tobias Straumann (University of Zurich). tobias.straumann@econ.uzh.ch
Niels-Viggo Haueter (Swiss Re).

ABSTRACT

The purpose of this session is to address the shortage of historical research into how insurance and reinsurance support economic growth in least developed countries (LDCs) and emerging markets. Few people dispute the positive impact of insurance on societies and the economy. Yet, opinions differ widely as to what kind of insurance works best. The involvement of multinational enterprises in developing economies led to protectionist measures and state intervention in the insurance industry extending at times to nationalisation. Since the 1960s, for example UNCTAD has helped promote national reinsurance as a decisive prerequisite for economic growth in less developed countries. This met with scepticism from developed nations. Yet, their reinsurance industries were often promoted with the same arguments in the early days. Germany, Switzerland, and Russia, for example, founded reinsurance companies in the 19th century to bolster the local economy. As of more recently, the World Bank, MIGA, and other UN institutions are increasing partnerships with the private sector to address natural and health risks in Latin American, Asian, and African countries. Also government programmes especially for agricultural risks are widespread but often struggle to be economically viable. Yet, professional insurers are still eying these potentially huge markets. The insurance industry, reinsurers especially, are increasingly seeking to collaborate with the public sector to develop new markets. Insurers developed new products modelled on micro-credit schemes, often with so-called parametric indices to avoid costly loss assessment. Some argue that such practices and modern insurance as such compete with more traditional forms of community based risk mitigation. Such solutions also challenge the role of foreign aid, charity organizations, and national disaster recovery programmes.The focus of this session is on LDCs and emerging markets and their views on how insurance and reinsurance could help economies grow. This includes former emerging markets such as, for example, Korea. It may also include critical sectors in difficult market environments such as agriculture in advanced economies. The following list of areas that may be covered is deliberately very broad, but contributions, in some form, should concentrate on the real, perceived, or expected impact of insurance and reinsurance on the economy:- Insurance, reinsurance, and the political economy.

– Insurance solutions in international organisations.
– Case studies in emerging and LDC markets.
– State run insurance programmes in agriculture.
– Comparative studies of state versus private insurance.
– Insurance in the face of protectionism and import substitution policies.
– For-profit versus not-for-profit insurance.
– Insurance/reinsurance and public private partnerships.
– Community based risk mitigation in traditional societies.
– Economic viability and impact of not-for-profit organisations such as fraternal and friendly societies.
– Climate change and risk mitigation in LDCs.
– Regulation of insurance in transition economies.

 

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