Good afternoon and you are all very welcome to our Annual Lunch. I am honoured to be here as your President, and to be able to address you on our industry’s positioning at a critical juncture.
It’s a pleasure to speak in front of a full house and to see so many familiar faces in the audience.
I will focus today on three main categories.
Brexit and Europe
The advancement of our advocacy priorities
Diversity & Inclusion – what it means for the industry
Before I continue, I would like to first acknowledge the excellent work of our outgoing President Anthony Brennan. A year ago, he stood here and outlined his priorities about engaging our membership and building our presence in Europe, and he has delivered in spades.
Anthony championed the work of our Councils, bedded down our merger and helped shape our expanded European Insurance Forum.
His stewardship of our Board meetings has also been noteworthy. For those of you who haven’t seen it first hand, I can assure you Anthony would have made an excellent diplomat and is a loss to the Brexit process!
1. Brexit & Europe
As we all know, Brexit has been postponed but the risks haven’t gone away. For us, there are a few key considerations.
Firstly, the immediate industry planning to ensure the system is resilient and customers continue to enjoy the benefits of their insurance cover.
We are all now aware of the need to carry a Green Card if driving into Northern Ireland in the event of a no deal Brexit. This showed the level of industry preparedness as, through the MIBI, over a million Green Cards have been issued.
As an industry, we have to plan for the worst outcomes. In responses to Insurance Ireland, members outlined how they have spent from the tens of thousands to the millions of euro on Brexit preparedness. This is time consuming and costly, but it’s sadly necessary and industry preparedness must be complemented by a transitional arrangement to bed this down.
We must also commend the work of the Central Bank of Ireland and the Government in bringing forward provisions for contract continuity for inbound providers in the event of a no deal. This is prudent planning and supports industry work in this area.
Secondly, the medium considerations around the future relationship for the EU 27 & the UK.
Brexit changes a lot of things but not geography so we will continue to have a close relationship with the UK insurance market. We must work towards an outcome that ensures the closest possible alignment with the UK market for financial services while at the same time, building stronger links with other EU financial services hubs.
There has been much talk of a Brexit dividend. We very much welcome the new players in the Irish market and our strong sense is there is more to come as Ireland’s status as a financial hub increases.
Thirdly, there are longer term considerations for Ireland in Europe. Ireland is a small open economy and the Irish insurance market is a hub for insurance for the whole continent and beyond. Our market, and our customers, require consistent EU supervision at a National Supervisory Authority level, and close alignment and cooperation with stakeholders as part of a strong Europe.
Specifically, we need:
A consumer-focused, transparent and integrated European insurance market
A sustainable Europe that unleashes the potential of insurance in areas such as Sustainable Finance
An innovative and digital Europe
Europe is an opportunity for our market. The future regulatory structure for a digital, innovative and sustainable insurance sector is found in Europe.
Since we opened our Brussels office last year, we have been presenting a strong Irish voice to the EU regulatory debate. The strength of our voice increases when we are speaking together and the cooperation with the Department of Finance, the Central Bank of Ireland, as well as with our colleagues in other representative organisations, is essential. We created close links with the EU institutions and EIOPA and worked closely with our sister organisations in France, Germany, the Netherlands, Luxembourg and Denmark.
Continuing on this path will be even more important after the UK leaves. We will lose our closest ally, but our expertise is welcomed at negotiation tables and we must engage.
With the Solvency II Directive under review, the insurance industry in Ireland has an opportunity to contribute to a strategic regulatory reform. To get ready for the debate, Insurance Ireland is currently seeking the input from members in an industry-wide survey and it will be your commitment which determines how we can engage.
But the Solvency II review will not just look at the numbers and calibration of our supervisory regime. It will touch upon fundamental questions like the future of the cross-border business model and the harmonisation of Insurance Guarantee Schemes.
With the support of our members on these critical issues, we can engage and make ourselves heard.
Advocacy Priorities International, Captive & Reinsurance
We are a very diverse industry and sometimes the breadth of work being engaged on can be missed, so I draw out some of the key policy files across our industry.
Looking to our international, reinsurance and captive management members, our positioning has never been stronger.Our cross-border sector writes business from Ireland into more than 110 countries with more than 25 million customers.
As part of our efforts to protect and grow this business, our Board recently met with Gabriel Bernardino, the Chair of EIOPA. We discussed critical matters including the enhancement of the cross-border Freedom of Services and Freedom of Establishment models in Europe as well as issues such as proportionality for Captive Managers.
At home, we have helped to shape Government policy on the future of our financial services industry through the recently launched IFS2025 strategy. Insurance Ireland has held the secretariat of the Industry Advisory Committee for the development of the strategy and our priority has been moving financial services up the value chain and we will fully support the strategy’s implementation.
In addition, harnessing the potential of innovation and InsurTech are key priorities for the reinsurance and captive council both through industry and policy initiatives.
Looking at the Non-Life sector, in the last year, we had the landmark report of the Personal Injuries Commission (PIC). The report found that the average soft tissue award in Ireland was €17,338, compared to €3,984 in the UK. However, most importantly, it stressed the urgent need for a policy response and the means to do so.
We believe there is a genuine acceptance now of the need for reform. In addition, the public view on this is clear with 78% supporting proposals to benchmark Irish personal injury compensation award levels with countries like the UK. Awards are the defining issue in the market and on behalf of Insurance Ireland, I can say unequivocally, we fully support the reform process and will do all we can to help complete this important work.
The central piece of reform is legislation to recalibrate the level of awards paid for personal injuries in Ireland and as yet, this remains undelivered. It is our firm belief that 2019 is a pivotal year for the delivery of reform in the interests of policyholders.
Our Health members have been active recently in informing their customers of their right to public treatment in public hospitals. Public polling conducted by Insurance Ireland has been run on understanding of the issue and attitudes to it, and what is shows is significant numbers are not aware of the practice in public hospitals of patients with private health insurance being asked to waive their right to public treatment.
The findings of the polling indicate that 80% of those surveyed believe it’s unacceptable for private health insurance customers to pay twice for their public treatment, once through taxation and again through health insurance. I commend our health insurance members for maintaining a proactive campaign to keep their customers aware of their rights in this context.
Looking to the Life Council’s work, which I have chaired, there is a huge opportunity for Insurance Ireland to contribute our industry’s expertise to pensions policy reform.
With Auto-Enrolment, pensions policy is being shaped for a generation and we have the experience to help deliver the best outcomes and significantly increase pensions coverage. In doing this, we have to be mindful of those who are already providing for their retirement. For instance, we know certainty is critically important when making long-term financial decisions and so existing incentives should be protected.
We will be publishing new policy documents to help inform the development of the auto enrolment model as part of the wider reform of pensions policy such as master trusts and supplementary pensions reform. Ireland has done much of the heavy lifting to support those who are actively saving for the future. The OECD’s Pensions Outlook 2018 argues that countries such as Ireland which operate a Exempt Exempt Tax or EET system, should maintain them.
We are mindful with all the many competing priorities for government, pensions reform is something that can often be overlooked or deferred to another time. Our clear view is now is the time and initiatives like auto enrolment that can provide long-term financial security should be firmly embraced.
Industry outlook - Diversity and Inclusion
In looking at the many workstreams the industry is engaged in; we can overlook the need to focus on internal priorities. For me, Diversity and Inclusion is one such priority.
This agenda was launched by Frank Mee two years ago and continued by Anthony Brennan. I want to continue the good work already being done by:
Maintaining the close cooperation with external bodies such as the 30% Club Ireland;
Leading the internal development of best practice guides for our member companies to follow – such as that being developed by the Inclusion Committee;
And finally, deepening our commitment to financial inclusion.
In this regard, I am very happy with Insurance Ireland’s collaboration with O’Connell Secondary School. These students were ably led by Principal, Lynn Kidney, and produced ‘An Insurance Masterclass – The Secondary School Guide to Insurance’.
The students developed a guide for other students to learn from and I would like to thank them for their time and hard work in completing it.
Thanks to II
Before I conclude, I would like to thank the Insurance Ireland team for the excellent work they do. Under Kevin’s leadership we have a professional organization with very strong capability working on our behalf and I am very much looking forward to working with Kevin and the team during the coming year.
I’ll conclude by saying as an industry, we are in a new dynamic; the external pace of change is increasing, and the expectations and responsibilities of our industry are increasing accordingly.
The industry voice can only be heard when members are engaged, and this requires ongoing commitment of time and expertise. This will be a key focus of mine over the year ahead as the organisation gets bigger and fulfils its remit.
In this context, and in the context of the role our industry plays in social and economic life in Ireland, I am honoured to represent the industry and you, its members, as your President.
Finally, I’d like to introduce our guest speaker Deputy Governor Ed Sibley.
Ed Sibley was appointed Deputy Governor, Prudential Regulation in 2017. He is an ex-officio Member of the Central Bank Commission and is also a member of the Supervisory Board of the Single Supervisory Mechanism. In his post, Ed is responsible for leading the supervision of credit institutions, insurance firms and the asset management industry.
Please join me in welcoming Deputy Governor Ed Sibley.