On 27 July 2009, the Insurance Industry Working Group (“IIWG”) published a well publicised report providing its views and recommendations on how to enhance the UK insurance industry in light of the medium to long-term challenges and opportunities facing the insurance sector.
In the report, the IIWG has agreed a vision for the UK’s insurance industry in 2020. The IIWG wants “the UK to be the leading global insurance centre with an unsurpassed reputation for excellence, a deep and constructive relationship with its customers and a close and effective partnership with Government”.
The IIWG recommendations to achieve this vision are underpinned by the following four main themes:
- creating a more customer-focused approach to increase customers’ confidence and trust in the insurance industry (as well as furthering customers’ awareness of their own personal responsibility);
- producing a broad range of risk management solutions, which provide customers with the products they need at a competitive price;
- for the insurance industry to act in partnership with the Government to explore options to increase savings and protection provision and to help consumers manage financial distress; and
- ensuring the UK insurance industry’s competitive position in the global marketplace is maintained and enhanced, and that capital can earn a competitive return, in order to encourage capital flows into the UK insurance industry.
The report builds on these themes and sets out numerous recommendations to both the Government and the insurance industry. These recommendations include, amongst others:
- developing a more co-ordinated approach to financial literacy and education and raising awareness of the need for appropriate levels of personal savings and protection amongst consumers;
- as far as possible, allowing time for existing initiatives to be implemented and to start having an effect before introducing any further significant new retail regulation initiatives;
- that legislative and/or regulatory changes support the industry’s ability to price according to risk factors;
- that industry and the Government assess the scope for a greater industry role in helping people deal with risks such as unemployment, ill-health, and the need for retirement income or long-term care;
- that the Government should continue to work with industry to ensure a stable, predictable and competitive tax system for the medium to long-term, which is aligned to the Vision for 2020 and takes account of increasing global competition in a world in which capital is highly mobile;
- that the industry should develop and attract the best talent to ensure there is a deep pool of insurance professionals with the right skills in insurance, technical and managerial disciplines; and
- that the Government should proactively support the UK’s insurance business abroad, particularly in emerging markets, and within the UK.
Mr Andrew Moss, the Industry co-chair and Group Chief Executive of Aviva, highlighted in his forward that “Our recommendations should not be broken off and implemented piecemeal. To maximise their effectiveness they should be taken forward as a package. The recommendations complement each other, build on each other’s strengths, and together create a virtuous circle.” The report suggests that the ABI is best placed to take the recommendations in the report forward and that an initial meeting between the ABI and the Treasury should take place to agree the next steps.
Finally, the report also highlights the benefits of a more co-ordinated approach between the Government and the Industry and the IIWG has asked the ABI to review possible methods of doing this going forward (e.g. a cross-industry forum meeting a few times a year to examine common issues). As highlighted by both Alistair Darling and Andrew Moss in their forewords, an effective partnership between the insurance industry and Government is key to the UK fulfilling its potential as the leading global insurance centre.
To view the entire IIWG report, please click here.