A record number of delegates flocked to the 2018 European Insurance Forum, where the main focus was on innovation and the vital role it can play in helping the insurance industry prepare for impending change
Established in 1592, Trinity College Dublin is the oldest university in Ireland, but its motto “perpetuis futuris temporibus duraturam–it will last into endless future times” made it a fitting host for the 2018 European Insurance Forum, which focused on how innovation can change the future of the insurance industry.
The conference was themed around crafting an industry for a modern vision, reflecting the growing innovative technology sector in Dublin.
Kevin Thompson, CEO of Insurance Ireland, the conference organiser, said this year’s event was about bringing the technology sector and the insurance sector together.
“As much as we have a strong regulatory and financial services sector here in Ireland”, explained Thompson, “we also have a very strong technology sector, whether that be regtech, insurtech or fintech. This conference is about those ecosystems coming together and I think this is the perfect location for that.”
He continued: “Innovation is pervasive, not just in our sector but in all sectors.”
The industry keynote speaker, Barry O’Dwyer, head of UK, Standard Life Aberdeen, said the conference would show companies how they can prepare for the enormous amount of change ahead. He added: “The pace of this industry has increased and will continue to increase.”
Innovation
One of the panellists in the making innovation real in insurance session, Brona Magee, deputy CEO, head of global markets, SCOR Global Life, suggested that innovation from outside the insurance industry can have an important impact and can help the industry keep up with the growing pace.
She explained: “Lots of innovations from other industries are relevant to insurance.”
“Many startups outside of the industry don’t know their relevance to insurance, you have to go out there and find them. You have to look for these startups and bring them in to develop solutions for insurance.”
“Innovation happening outside the industry can have an impact within the industry and on our customers.”
Magee explained to delegates that dealing with these types of companies may pose different challenges than the partner companies they are used to working with.
She commented: “They’re very different from traditional partners. They have a very different mindset.”
According to Magee, when dealing with startups it is important to be “agile” and to be prepared for the ideas you are developing to fail.
Another panellist, Fergal Collins, CEO, Aon Centre for Innovation and Analytics, suggested that scaling innovation continued to be a big issue for insurance companies.
Collins commented: “Acceptance is the challenge, if the innovation is not accepted it is not going to scale.”
“It is all about understanding how it can help people do their job and so having designed thinking as part of the conversation upfront is important so you can really understand what people are asking for.”
Regulation
Another challenge facing innovation in the insurance industry is regulation. Panellists from the regulation of an innovative insurance market session suggested mindsets amongst regulators in the insurance industry must change to be more conducive to innovation.
William Vidonja, head of conduct of business at Insurance Europe, stated that a change was needed.
He explained: “Regulation should be conducive to innovation. That means that regulatory framework should allow consumers, the industry, the existing insurers, and also the challengers to take advantage and benefit from all the different opportunities that digitalisation and new technologies can bring.”
“Is this the case today? From my experience when I look at European regulatory frameworks, I would say no.”
He added: “The regulatory framework at a European level is not digitally friendly, it is not innovation-friendly.”
Vidonja stated there was an “urgent need” for policymakers to remove “barriers on innovation and digitalisation”.
He explained: “That doesn’t mean introducing new rules, it means reviewing the existing rules and ensuring they are fit for innovation and digitalisation.”
Another of the panellists, Dan Forgeron, president and CEO of the Insurance Bureau of Canada, agreed with Vidonja and added that a “mindset change” was necessary “on behalf of the regulators”.
He said: “The words regulation and innovation in the same sentence do not work at opposite ends, they are not mutually exclusive. I do think it is going to take a mindset change on behalf of the regulatory community.”
In the same session, Rory Moloney, CEO of Aon Global Risk Consulting, discussed the needs of captives from a regulatory standpoint, highlighting proportionality and consistency.
Moloney noted that Solvency II has been a massive undertaking and development for captives and a “very successful one”, but questioned whether the one size fits all format was warranted.
He continued: “A couple of years in Solvency II has been a positive thing. As the profile of the risks evolves and as the regulatory environment grows, is there a context for proportionality to be introduced from that perspective?”
“On consistency, the issue is different regulators in different jurisdictions having different interpretations of the same rules. The phrase one of my client uses is that the ingredients are the same, but the cake tastes different.”
Human capital
Continuing the emphasis on the way in which insurance can stay modern, Vievette Henry, global head of organisational effectiveness at AIG, US, said that diversity will be a “game changer” for insurance companies.
Speaking on a panel covering human capital, the most overlooked asset class trends, challenges and opportunities, Henry stressed the importance of having diversity within your business.
She commented: “You have to think about diversity, it will be the game changer. We are in the human capital business, we need people. Figuring out what works and what is appropriate is going to be a game changer.”
During the session, the panellists emphasised that diversity meant a range of things, including gender, ethnicity, and age.
Another member of the panel, Vanessa Hartley, director of retail and agency, LCS UKi, Google, added: “Diversity of thought is just as important. If everyone thinks the same, you are going to get the same set of outcomes.”
Henry suggested that too often the diversity within companies was overlooked in meeting rooms and that it was “important to redirect focus when that diversity is being overlooked”.
According to Henry, AIG had identified the importance of human capital and the diversity of thought within it and were working on expanding how they attracted talent.
She explained that AIG is currently examining ways to target talent from other industries–through apprenticeship programmes, to target recent retirees looking to reenter the industry, and to target women looking to return to work after having children.
An international hub for innovation
The importance of human capital was a topic also discussed in the Insurance Ireland council chairs session later in the day.
Aidan Holton of Monument Insurance and the II international chair, argued that the industry needed a shift in mindset when it came to human capital.
He said: “We need to start thinking about people in the same way as we think about capital. Human capital needs to be attracted and rewarded.”
‘I am not sure as an industry we have moved out of the mindset of the last 10 years, which was ‘you’re lucky to have a job’. I don’t think that applies anymore.”
John Quinlan, II non-life council chair and CEO of Aviva Ireland, noted that Brexit represented an opportunity for Ireland to attract some high quality insurance industry talent. He commented: “It is an obvious opportunity. We need to make sure we have the right regulatory and tax regime in place to make the most of what is a really big opportunity.”
Also speaking on the panel, Debbie O’Hare, Dublin International Insurance & Management Association chair and CEO of Hannover Re, Ireland, said moving forward it was “clear that talent and innovation will help companies to stick in Ireland”.
O’Hare stated that the domicile was uniquely placed as it had a small economy with a deep technology and financial services hub, and benefited from the combination of a local level of contact between the industry and a high level of skills amongst talent.
Speaking at the event, Thompson predicted Ireland will grow exponentially as an insurance hub over the next few years, and will grow its captive market.
According to Thompson, the Irish captive market, made up of 38 captives, was in a “solid state” but had all the attributes to see future growth.
He explained: “We have a strong tradition in the captive market, with a strong regulatory environment and strong talent pool supporting it.”
“We have the talent, we have the regulatory infrastructure—so we have the ecosystem.”
“Technology is starting to play a bigger part both for captives and for insurers, and we have a great technology ecosystem as well.”
“Ireland has always been renowned and it is an international hub for insurance. I think that will continue and Ireland will grow exponentially as an insurance hub over the next few years, as will captives.”
He added: “So I think we have the fundamentals to maintain captives but also let the captive market grow.”
Thompson predicted that in 2019 the captive market would continue its “stable status”, as “there is enough volatility out there from all different quarters”.
According to Thompson, there were a number of issues holding back both the captive and mainstream insurance markets at the moment, including “competitiveness, the war on talent, and making sure the right people are in place to service the business”.
“I think the big issue that we are facing at the moment that causes uncertainty is Brexit.”
“There are a lot of companies, including captives, going through the thought process of how they will reconfigure their business, if at all, in preparation for Brexit.”
“Companies will have made their decisions already in terms of what they’re doing but we will see that impact in 2019.”
Thompson suggested that with Solvency II now implemented and companies feeling more “sure-footed in terms of their obligations under Solvency II and what that means for them”, the upcoming reviews could present a good opportunity for refinement and to reinforce the idea of proportionality and how it is addressed.
He added: “The dialogue with the regulator is there, we just need to be clearer about what we need.”
Conclusion
This year’s conference attracted a record attendance of more than 340 delegates, a number which Thompson suggested “reflected the strength and breadth of the sector”.
Thompson noted that the event’s theme “perfectly encapsulated” the insurance sector’s “outward focus while meeting the challenges of existing business needs”.
He argued that the event presented the ideal opportunity “to consider macro trends including economic and technological developments and the interplay of political, regulatory and consumer trends” and to “take important insights back to the operating business level so that the sector can deliver real innovation for our business and customers”.
