Globalization of Services Is Different
Griswell, J. Barry, Global Finance
Some may question the concept of globalization, claiming that it only leads to overcapacity, overborrowing, and underemployment. Maybe that can be said about the manufacture of products and technologies, but it just doesn't apply to certain services. The insurance and retirement services sector, by its very nature, is people-oriented and attuned to the longer-term needs of customers.
A global retirement services provider views protectionism as counterproductive. Whether our customers are in Des Moines, Jakarta, Mexico City, or Madrid, we welcome the opportunity to help as societies open up their state pension systems to free enterprise. That does not mean we will muscle out local players; on the contrary, our long-term perspective motivates us to seek out local joint venture partners. Though our strategy is based on leveraging such key competencies as customer service, technology, and administration globally, it is critical that we adapt to particular needs of the local culture. Local partners can help us better understand the needs of their societies. An example of a very successful partnership is our relationship with BanRenta, our Chilean life insurance joint venture. We recently increased our ownership in this joint venture, to 87.5% from 50%, and plan to explore other potential employee benefit business ventures in the region.
As a life insurance and retirement services provider, we at The Principal see a widely and evenly distributed phenomenon occurring that very much encourages a global view. It is the aging of the worldwide population and the growing awareness of the need and potential to take better care of the elderly in every society on earth.
Awareness also is growing that enormous liabilities exist when people commit to providing viable retirement income, whether a country's workforce is underutilized or there is overcapacity. One route governments have taken is to welcome insurance and financial services companies that can demonstrate the value of saving and planning for the future. …