International Insurance Trade--U.S. Market Open

In response to a congressional request, GAO reviewed the competitiveness of the U.S. insurance industry by examining the access of foreign-owned firms to the U.S. insurance market, barriers to U.S. firms serving foreign markets, and Federal efforts to remove insurance barriers in world markets.

Statistical data show that the number of foreign-owned firms licensed to operate in the United States has substantially increased over the past decade, but that these firms have achieved only a relatively small share of the U.S. market. Representatives of foreign-owned firms believe that the limited market share is due to strong competition, not from U.S. barriers. Officials of U.S. insurance firms that operate outside of the United States said that barriers hamper their ability to compete for business on an equal basis with domestic firms in foreign countries and result in decreased earnings. Government and industry officials believe that foreign barriers are widespread, but the extent of new business that would be achieved if these barriers were lessened or removed is unknown. There are indications that U.S. firms are successfully overcoming the barriers in some instances. More importantly, the elimination of barriers may not result in substantial financial benefits because of domestic competition in the developing countries and low premium volume in the less developed countries. The United States will discuss these barriers in multilateral trade negotiations. However, significant progress probably will not be achieved before 1990. In the interim, companies can seek relief on a case-by-case basis. Before giving priority to any individual industry's concerns, the United States needs to know the significance of foreign barriers and whether substantial economic benefit will be realized by the industry if the barriers are lessened or eliminated.