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Uzone.id – As infrastructure and commercial services, a well-functioning insurance sector is vital in economic development at the macroeconomic level and in individual and business activities.
The effects of international trade and the global economy led to a significant increase in cross-border insurance transactions. Moreover, the insurance sector is one of the main elements in the trade and development matrix.
In line with the company’s policy of continuing to expand its business operations internationally, and people travel more frequently, consistent and harmonized insurance regulations between countries are increasingly needed.
Harmonization in insurance regulations between countries aims to create a unified framework. This alignment also benefits companies and insurance owners, especially building efficiency and consistency in different markets.
Harmonization will reduce the difference in rules between regions or countries so that insurance companies do not need to adjust their systems with many different regulatory systems, and the administrative process will be more straightforward.
As a result, insurers can save Time and costs associated with adjusting policies and strategies for different markets. Insurance companies also quickly enter new markets without facing complex regulations.
In addition, harmonization in insurance regulations also aims to create a more competitive environment. With harmonization across jurisdictions, insurers can focus on product and service innovation without being distracted by complex adaptations to different regulations in each region.
A harmonized regulatory environment also encourages competition through the production of innovative products, lower premiums, and better consumer protection. With the same standard rules, insurance users will get the same protection level regardless of where they buy insurance.
In addition, companies will also have a level playing field in a fairer environment because harmonization reduces opportunities for rogue insurers to seek jurisdictions with lax regulations to avoid strict requirements.
Last but not least, decentralized regulation contributes to the global financial system by creating a more stable order by reducing systemic risks, such as the failure of large insurance companies to return customer funds that could shake global financial markets if this is true.
This is because harmonizing regulations allows more consistent supervision of large international insurance companies.
In addition, with uniform rules, insurance companies from different countries will be easier to compare, thereby increasing transparency and trust between investors, insurance owners, and regulators.
However, as interesting as harmonizing insurance regulations across countries is, this system has some challenges that cannot be ignored. First, harmonizing diverse legal and regulatory systems cannot be done quickly.
Finding a solution that is suitable for all parties is not easy. This is the first challenge that requires a solution as soon as possible. Second, cultural factors will indirectly affect insurance practices and consumer preferences, making it difficult to implement regulations universally.
Third, each country’s government may have different priorities and political agendas. Politics can make cooperation difficult and complicate international regulations.
In general, the government prioritizes domestic interests over international commitments. A change in leadership in a country will pose new challenges because each leader has a different work agenda.
In addition, for developing countries, bureaucracy in cross-country harmonization may only be designed for the context of developed countries, so it isn’t easy to apply and is less relevant to them.
It is no less important to note that many countries are reluctant to give up control of their domestic regulations because they are considered to violate sovereignty. In addition, some countries may think that harmonizing regulations will reduce their competitiveness in attracting foreign investment, especially if the requirements are more stringent.
Lastly, each country has different regulatory standards regarding privacy and data protection. To harmonize regulations is certainly not a quick and easy effort. Intensive dialogue and diplomacy are needed to balance homeland security needs and meet global demands.
