The Economist Events convened an audience of around 200 delegates, for the Insurance 2015 event, held on Tuesday March 3rd at the Clothworkers’ Hall in London. Paul Fisher, Deputy Head of the PRA and Executive Director of Insurance Supervision and Supervisory Risk and Regulatory Operations, Bank of England, in his last speech as Insurance Director, opened by covering some of the macro issues currently facing the insurance industry: “The UK insurance industry is one of the most advanced and successful in the world. It is one of the foundations of our daily lives, allowing risk transfer for all aspects of society. Insurance is very different to banking and this is one of the things appreciated by the PRA, but lessons can be learned from the banking experience. Strong effective systems of oversight are paramount. Governance issues are at the top of the PRA’s agenda.”
A following panel discussed the implications of the big data arms race. Nigel Walsh, Vice-president, Head of UK Insurance, Capgemini, commented: “There is no shortage of data coming in or available in the open market, but what are we trying to do with it? We will too quickly drown in a data lake! There needs to be a shift towards customer centricity. Customers are once again at the forefront of the insurers minds as experiences from outside the industry continue to drive up expectations, clearly evidenced in our World Insurance Report 2015 that showed a concerning decline in customer satisfaction.”
Speaking around the growth in insurance technology, Adrian Guttridge, Executive Director, Xchanging Global Insurance Services, highlighted market adoption as an issue: “There is more collaboration in banking than in insurance. Speed is important in banking; in insurance what is more important is keeping to your word. Insurance has not had the compelling event to drive technology change. Getting greater market adoption of new products and services is frequently a challenge.”
Andrew Brem, Chief Digital Officer, Aviva; Chris Lamberton, Partner and Head of Digital Insurance at EY; Ian Morgan, Industry Director, Finance, Google UK and Ash Roots, Director of Digital, Direct Line Group discussed the issues around insurance for the mobile generation. Chris Lamberton said: “There are not enough touchpoints to create a trusted relationship between customers and insurers. Only 10% of customers still want to talk only on the phone, but this is currently the main touchpoint for insurers. Once trust is lost it is difficult to get it back again. Every interaction with customers should be a point where we can build trust.”
Ian Morgan added: “Trust is key for Google. There are no barriers to exit from Google – other search engines are available. People are willing to give up information if they feel they are getting something in return that is of value to them. Insurers need to think of what is the tangible quid pro quo in return for the consumers giving them their data.”
Eric Andersen, Chief Executive Officer, Aon Benfield; Peter den Deker, Insurance and Risk Manager, VimpelCom and Mike McGavick, Chief Executive Officer, XL Group discussed insurance relationships to 2030. Mike McGavick explained: “I think there will be a large wave of consolidation in part driven by compliance pressures which are more easily met by increased scale. This scale also gives us competitive advantages in the form of access to increased datasets which can provide new and valuable insights. Ultimately, the insurance market needs to scale-up to be able to step-up to provide the right solutions to clients in a world where risks are multiplying and mutating all the time.”
The day concluded with Margareta Wahlström, Special Representative of the Secretary-General for Disaster Risk Reduction, The United Nations Office for Disaster Risk Reduction, being interviewed by Rowan Douglas, Chief Executive Officer, Capital Science and Policy Practice, Willis Group, and Chairman, Willis Research Network.
They discussed disaster risk now and through to 2030 and what role the industry will play post Hyogo. Rowan Douglas said: “2015, with Hyogo, the SDGs and Paris is a transformative year for addressing climate and disaster risk and the time is now. Policy makers worldwide are waking up to the value of insurance and the international policy world is being reshaped. At the upcoming UN world conference in Sendai, Japan, in two weeks’ time, 8,000 people will conclude an agreement on disaster risk reduction and the insurance industry has a huge role to play in reshaping international policy around this. I have seen a remarkable change in the perception of insurance with politicians internationally as leaders consider incorporating disaster risk management throughout businesses not just for insurance."
Douglas concluded by asking the Assistant Secretary General “Margareta, do you think that communities and institutions can achieve effective resilience without insurance? For insurable risks, do you think there could be a time when, it is considered a human right to have access to insurance whether through public, private or mutual mechanisms?”
Margareta Wahlstrom responded: “We cannot be resilient without access to insurance systems. Insurance helps people and countries recover more quickly after a disaster if they are insured. Loss of economic capacity is one of the hardest issues for people to face and we need mediation between the insurance industry and public sector. Disaster risk is a critical issue for all countries around the world. Many disasters have not yet happened and therefore most insurance policies have yet to be written.”