The Development of European Private Sector Insurance over the Last 25 Years and the Conclusions that Can be Drawn for Business Management Theory of Insurance Companies

Abstract

1. Introductory remarks The Geneva Association is 25 years old this year. This is a good opportunity to review the past period, both from the point of view of actual developments in the European insurance industries as well as the development of business management theory relating to insurance and insurance companies. All three of these areas have changed. The original French title of the Geneva Association, ‘‘Association Internationale pour l’Etude de l’Economie de l’Assurance’’, today tends to be better known in its English version as the ‘‘International Association for the Study of Insurance Economics’’. Its principal publications are The Geneva Papers on Risk and Insurance, divided into two series, Theory and Issues and Practice. The scope of the Geneva Association’s activities, originally confined to economic questions concerning private sector insurance, has widened greatly to include risk management, legal aspects of insurance, social insurance, certain individual risk causality systems, economic aspects of health, as well as financial services in the broadest sense. English has for a long time been the principal scientific language of the Geneva Association. This development mirrors the actual development of the insurance industries nationally, in Europe and worldwide. In 1973, the year the Geneva Association was founded, the EEC had just issued the First Non-Life Insurance Directive, which might be regarded as the conception of the European internal insurance market. It is well known that the birth did not take place for another 21 years, when the third generation of directives were adopted into the legal systems of the Member States. The current state of the internal market is still somewhat nebulous. It is only operational in a limited number of areas so far, and from some points of view its real development has only just started. It is also not always easy to differentiate the effects of the European internal insurance market from those of the deregulation of many national insurance markets. Both the theory of insurance economics as well as the situation of research and studies concerning insurance economics have also undergone marked changes. Here two differing types of relationship between theory and reality must be distinguished. In the one instance it is economic reality that changes; insurance industry practice searches for, finds and assumes new forms. This often takes place in a very pragmatic and not particularly systematic manner.