European Insurance Forum 2009
MEDIA COVERAGE
EIF2009 MEDIA COVERAGE
Solvency II will cut insurer competition
Solvency II will lead to higher costs, recduced capacity, poorer service standards and fewer lead carriers for larger insurance buyers, a prominent risk manager has warned
Richard Banks, Editor, Insurance Day
Regulators cop out from Solvency II, warns Transamerica International Re CEO
Solvency II could be compared to the Titanic and international regulators were largely copping out, according to Stephen Devine, managing director at Transamerica International Reinsurance Ireland.
"On Solvency II, I'd ask whether we've created something for the purpose in global markets. I'm sceptical of the IAIS [International Association of Insurance Supervisors]. Seeing what was produced in the past, I think a lot of this is a copout and a sop,". Devine said that the directive was like the Titanic about to face an iceberg. "In the life insurance industry, long-term risks and liquidity risks are not as in banking. I ask, is there enough scope in Solvency II to address such issues? Does level one have too much detail set down in stone?"
The Titanic had its launch, which was wonderful, Devine said. "And then it went off, but when the iceberg hit, it couldn't turn around in time."
Paul O'Connor, head of wholesale banking at the Irish Banking Federation, said that the industry had to prepare. "We need people to stand in the bows of the Titanic and not in the stern. We need more think tanks on the icebergs, and to see which icebergs may be out there."
Dick Tulloch, director, actuarial services at Deloitte, noted that regulators would have to get used to the standard model. "Not everyone has to use the internal model. There is a standard model and most companies, the smaller ones, will use it. Yes, there are technical issues with it, but most people have got the skills if they've worked in the industry, and it's a matter of getting used to it."
Alex Davidson, Complinet
Guenter Droese, risk manager for Deutsche Bank, added that larger buyers who use captives would find themselves impacted by Solvency II through those.
Droese told the European Insurance Forum in Dublin that the new solvency framework was likely to lead to a reduction in capacity on what he called "high risk classes", although on the lower-risk categories capacity would be unlimited". "All these pressures, combined with the increased need for certainty in modelling means Solvency II will lead to a certainty of premium increases (for buyers).
Richard Banks, Editor, Insurance Day
Reinsurance to reset to survive challenge
The Reinsurance industry has the opportunity to reset itself but faces some significant capital challenges if it is to survive. That was the stark message from a panel of prominent industry figures at the European Insurance Forum in Dublin.
Mike O' Halleran, executive chairman of Aon Benfield, told delegates: "We have the opportunity to reset the game and the rules of the game."Central to that would be better understanding of credit quality and security and the fundamental knowledge of risk, he said.
I'm of the opinion we're already seeing a classic reinsurance market turn," O' Halleran said. "Its going to have to keep turning for survival. [The industry] needs more capital and it is going to have to figure out a way to get it.
Speaking on the same panel, AXIS Capital's president and chief executive, John Charman, predicted the current economic crisis would have fundamental impact on the reinsurance industry.
"Historically markets have moved because of liability issues," he said. "This is the first time the industry has been affected by the asset side to the extent it has been in the last eight to ten months."
Richard Banks, Editor, Insurance Day
Regulation demands closer relationship with outsourcers, says Pearl Group director
The current regulatory oversight environment demands a closer relationship between the customer and outsourcing service provider, Ciaran McGettrick, managing director at Pearl Group Ireland, said at the European Insurance Forum 2009 in Dublin. He said that organisations should treat the relationship with the outsourcing service provider like a heart transplant. "It's not a window cleaning contract."McGettrick added that from a regulatory perspective, customer treatment was critical. "Customer experience can be driven by the product situation. It is no longer appropriate to take a blanket approach."
The current regulatory oversight environment demands a closer relationship between the customer and outsourcing service provider, Ciaran McGettrick, managing director at Pearl Group Ireland, said at the European Insurance Forum 2009 in Dublin. He said that organisations should treat the relationship with the outsourcing service provider like a heart transplant. "It's not a window cleaning contract."McGettrick added that from a regulatory perspective, customer treatment was critical. "Customer experience can be driven by the product situation. It is no longer appropriate to take a blanket approach."
He recalled a case of a general insurer that took on blocks of policies but found that the groups of customers had different expectations. "It was critical to ensure that customer expectations and regulatory requirements met."
He said that treating customers fairly might mean different things, which could vary from the contract. "Regulators, I know, would take this position."
Fergal O'Shea, consulting actuary at Watson Wyatt, said: "Solvency II is a failure regime. People in this room look higher than that to customer excellence."
Alex Davidson, Complinet
Watchdogs finding crisis is helping them to recruit
"Solvency II: evolution or revolution", Colm Fagan, chairman of the International Financial Services Centre insurance sub-group on Solvency II, explained: "Regulators will need to upscale significantly. That will be an area of real concern."
The challenge will be particularly acute for the smaller regulators, such as Ireland's, which Fagan said was "not at the races in terms of skills" when compared with bigger counterparts such as the UK's Financial Services Authority (FSA).
Richard Banks, Editor, Insurance Day