Final answer:
Insurance firms will internationalize via FDI to establish direct contact with customers and provide tailored insurance products and services in foreign markets.
Step-by-step explanation:
Insurance firms will internationalize via FDI because they require direct contact with customers. Insurance is a service industry, and by establishing foreign subsidiaries, insurance firms can directly interact with customers in different countries, understand local market needs, and provide tailored insurance products and services.
FDI allows insurance firms to establish a physical presence in foreign markets, such as setting up branch offices or acquiring local insurance firms. This way, they can build trust with customers, offer localized insurance policies, and provide prompt and efficient claim settlement services.
Examples of insurance firms that have expanded internationally through FDI include AXA, Allianz, and Prudential. These companies have established operations in various countries to tap into new markets and serve customers directly.