- Overview
- Commonwealth initiatives
Insurance in the Commonwealth
Insurance companies are important to the stimulation of private sector saving and the subsequent investment within economies in the Commonwealth and beyond. The money that insurance companies raise through premiums, many economists say, can be availed for investment in infrastructure and the manufacturing, agricultural and service industries. The insurance industry in the Commonwealth has grown remarkably since the demutualisation wave and the liberalisation of the sector in the 1980s and 1990s, which brought new players and products to the market.
A number of Commonwealth countries dominate in a variety of insurance fields worldwide. Bermuda, a UK overseas territory, forms the largest captive or offshore insurance market in the world. The UK (mainland) is home to Lloyd’s of London, the world’s largest insurance market, which provides specialist insurance services to businesses in over 200 countries and territories. Malaysia has the largest takaful market in the world. Takaful is a form of Islamic ‘insurance’. Insurance penetration rates (ratio of aggregate premiums to GDP) in the UK and South Africa are some of the highest in the world, between 12% and 17% year on year.
Insurance penetration rates, however, in most of the Commonwealth are still very low regardless of evident growth – most below 5%. Experts attribute this mainly to lower income levels, cultural differences, a lack of knowledge, and a lack of regulation allowing poor entrants into the sector thereby instilling little public confidence in the sector.
The Commonwealth Secretariat in recent years has convened workshops and conferences with the ultimate aim of enhancing corporate governance in insurance companies and promoting better regulation of the industry.
