Rising to challenges
and changes ahead!
Informative and provocative might best describe the 3rd
Annual Industry Leaders’ Summit organised by President Adrienne O’Sullivan and
The Insurance Institute of Ireland team.
Pat Henry, “Potentialist”,
provided a different angle on
Leadership qualities. Pat encouraged
delegates to avoid negative
”vampires” in their organisations
that sucked their energy!
Minister of Finance,
Brian Lenihan TD spoke openly of the
“very interesting year” since the
last Summit. The vote in favour of
the Lisbon Treaty gave a positive
message to the rest of Europe.
Instigating NAMA had been difficult,
with massive misrepresentation of
the banking sector. NAMA helped
release funds so banks could resume
lending.
International
confidence in Ireland was clearly
demonstrated by the borrowing of
Euros 7 billion for a 15 year term.
However, the current shortfall in
the budget of Euros 22 billion could
not be sustained and sacrifices
would be required for the sake of
the country and its children’s
future.
Lenihan was keen to
attract more insurance entities to
Ireland, but noted the 22% decrease
in premium, mainly in the Life
sector. Whilst appreciating that
motor claims had increased
substantially, he wanted value from
insurers and was concerned at the
increase in motor rates.
The Framework
Directive for Solvency II had been
agreed by the dáil, but the
risk-based approach would present a
big challenge in its practical
implementation. Lenihan invited the
insurance industry to maintain an
open dialogue with his Ministry to
achieve a consensus on regulatory
reform.
Margaret Doyle of
Reuters moderated the panel on
Pensions and Private Medical
insurance, which focused on
“Building for tomorrow”. Brian Buggy
of Matheson Ormsby Prentice
expressed concern at “tweaking”
existing tax treatment in the Green
Paper, which was an important driver
in the current “EET” model (Exempt,
Exempt, Tax).
Supplementary
pensions complemented the State
pension of only Euros 12.000 pa.
Increased longevity created
challenges requiring people to work
longer, as already accepted in other
parts of Europe. Defined Benefit
schemes were on the decline and 50%
were now closed to new members.
However, employers recognised the
need for Supplementary Pensions.
Paul Kenny, Pensions
Ombudsman, demonstrated an
encyclopaedic knowledge and reminded
the conference that Income Tax had
originally been introduced as a
temporary measure to pay for the war
against Napoleon! The Ombudsman’s
job was counter-cyclical with a 68%
increase in case files, mainly from
the construction industry.
Whilst there was a move towards
hybrid schemes, 50% of the
population did not have
Supplementary Pensions. There was
definitely a need for change. He was
against too much regulation,
resulting in a box-ticking
mentality. Paul emphasised that
communications from employers about
pension conditions had to be clearly
understood!
Liam Sloyan,, The
Health Insurance Authority explained
he would be reviewing “Community
rating”, and problems regarding no
discrimination in rating between the
young, old or disadvantaged. This
might result in age-related tax
credits, involving a levy. He wished
to eliminate unfair competition and
recommended that VHI become an
“Authorised Insurer”.
Jim Dowdall,
Aviva Health, warned
delegates that 15% of them would
experience a heart attack in the
next 5 years! As over 50% of the
population purchased Private Health
insurance, it was a reflection of
the failings of the Public Health
system to which the Private Sector
contributed Euro 200m pa. Rates
would have to increase and Jim
called for new thinking on Health
provision.
Alastair Evans, Head
of Government Policy and Affairs at
Lloyd’s, warned of the increasingly
intrusive nature of proposals from
the EU and myriad regulatory
organisations (See slide).
CEIOPS was concerned about
weaknesses in Solvency II. A
rational and proportionate reaction
from Regulators was needed. Whilst
the trend was for a macro economic
prudential approach, the focus would
be on consumer protection. Brokers
needed to be particularly aware of
the Intermediaries’ Directive! The
industry should not flinch from
making its concerns known.
Professor Michael
Mainelli, Z/Yen Group, argued for
less regulation and more
competition. The crisis was a
failure not of an open market but of
a regulated market that was closed.
Increased regulation resulted in a
reduction in diversity. Competition
should be at the heart of the
debate.
The challenge was to
create a secure 75-100 year
financial structure in which a 20
year-old could be guaranteed a
reasonable income on retirement.
Looking at creating a long term
savings product of perpetual value,
he questioned what Society might
value in the future.
Lord Hunt of Wirral,
Beachcroft LLP, (Past President of
The Chartered Insurance Institute)
tackled Corporate Responsibility and
Ethical Standards against the
background that consumer confidence
had nose-dived and Financial
Services, including Insurance, had
been demonised.
He advocated that
professional expertise be enhanced
through Continuous Professional
Development, including emphasis on a
professional code of ethics plus
raising qualification standards.
Insurers had a duty to the public
interest and there should be
sanctions for misconduct!
Colm Long, Facebook, stated Social
Media was not a fad but a
fundamental shift in communication.
It gave people the power to share
openly with a worldwide network.
Growth was exponential as the
average user had 130 “friends”. He
gave examples of where Facebook had
been used as a promotional tool and
felt insurers could do more to
increase the Public Profile of their
brand.
Steven Lathrope,
Accenture, drew attention to the
huge asset write down of $ 250
billion experienced by the industry.
At operational level, the industry
was sound and providing an essential
public service. There was increased
usage of Price Comparison websites
on the internet.
Technology improved
experience of that “moment of
truth”, the claim, and evidence
could be transmitted quickly by
iPod. Steve covered Competition,
Distribution, use of the Mobile and
Claims practice.
The Summit ended with
Dr Maureen Gaffney reinforcing Pat
Henry’s message and highlighting
levels of response to trauma:
Survival, recovery and flourishing!
Noting people flourish if committed
to something bigger than themselves,
she recommended that we rise to the
challenge!
PT / 14 Oct 2009
