The Covid-19 pandemic has created a global public health emergency with severe human and economic consequences. Insurance is an essential service at this time of distress, providing protection against the heightened uncertainties created by the pandemic. For insurers to play this role, and to contribute to economic recovery, the stability of the sector is vital. To this end, the IAIS has been closely monitoring developments and actively coordinating with other standard-setting bodies and the Financial Stability Board (FSB) to assess the impact of Covid-19 on the global insurance sector. The IAIS is also committed to supporting the FSB’s recently published principles for ensuring international cooperation and coordination of responses to Covid-19. Moreover, the IAIS is facilitating the sharing of information and discussion among its broad membership on supervisory responses to the impact of Covid-19. Continue reading…

by Lieve Lowet

This is the last part of the series of three articles about my in-depth investigation of the aforementioned measures as a result of the corona crisis. All the above actions, mentioned in the two previous articles, we although, prima facie and probably well intended, carry nevertheless a very heavy price. I will focus on the insurance sector by naming five topics.
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by Lieve Lowet

This is part two of the series of three articles about my investigation into the recent measures taken by European authorities as a result of the situation that has arisen. This article is more specifically about Solvency II. For insurers, there is no equivalent measure to Article 141 CRD. There is no such legal base in the Solvency II framework directive to ‘urge’ not to distribute. Article 71(1)(l)(i) of the Solvency II Delegated Regulation refers indirectly to the cancellation of distribution (dividends) in case of non-compliance with the SCR or where the distribution would lead to such non-compliance when legal or contractual arrangements allow for such cancellation. But it does so in the context of the classification of tier 1 basic own funds. In the past, EIOPA has referred to the cancellation or referral of dividend distribution when the validity of the business model is at risk: this was a recommendation to national supervisors e.g. after the 2016 stress test to address the vulnerability identified in the exercise. And in its recent consultation paper on the Solvency II review (EIOPA-BOS_19-465-CP-0pinion 2020), EIOPA’s draft advice links the potential by supervisors to limit or withhold dividend payments and other voluntary capital distribution to a sustainable solvency position when insurers use e.g. long-term guarantee measures. It also touches upon the prohibition of payments of dividends outside the EEA as another method of group supervision or as an alternative for the capital surcharge in case of systemic risk. Pious wishes?
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Michel Klompmaker

The US-based insurer Lemonade is now entering the Dutch market. This so-called “disrupter” within the insurance market does it just that little bit different than the traditional insurers. This new player simply reserves a fixed amount for costs and profits. The rest of the premium money goes to the payment of claims and what remains afterwards is donated to charities policyholders choose. Not for nothing is the company the only insurer in the Benelux with an international B-Corp label. The company is driven by social impact and bases its models on behavioral economics and artificial intelligence. We recently spoke to Daniel Schreiber – CEO of Lemonade, whose European headquarters is in Amsterdam.  Continue reading…

The FCA has published the interim report of its market study into the pricing of home and motor insurance. The FCA found that competition is not working well for all consumers in these markets. It sets out concerns about how pricing in these markets leads to consumers who do not switch or negotiate with their provider paying high prices for their insurance.

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The Board of Governors of the Federal Reserve System (Board) engages on global insurance regulatory and supervisory issues chiefly through its participation in the International Association of Insurance Supervisors (IAIS) alongside the U.S. Treasury’s Federal Insurance Office, state insurance regulators, and the National Association of Insurance Commissioners (NAIC). The U.S. members of the IAIS are informally known as “Team USA.” The mission of the IAIS is to promote effective supervision of internationally active insurance companies. It is important to note that none of the standards set by the IAIS have binding effect on the United States. We believe that it is in our national interest to engage in the international insurance standards-development process so that it produces standards that protect the U.S. market and U.S. consumers when foreign insurers operate here and are appropriate for U.S. companies operating abroad.

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The Financial Conduct Authority (FCA) is warning General Insurance (GI) firms about manufacturing, sales and distribution approaches that can lead to customers purchasing inappropriate products, paying excessive prices or receiving poor service. The recently implemented Insurance Distribution Directive requires that all firms in the GI distribution chain act in accordance with the best interests of the customer. The recently implemented Senior Manager and Certification Regime is designed to make Senior Managers accountable for the actions of their firms.

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Underwriters need to develop away from transaction-driven model to stay relevant. Airmic chief executive John Ludlow has called on insurers to “transform” their business models to meet the changing needs of businesses. Writing in a Telegraph special report hosted by Business Reporter, he said that the value in today’s business models is based upon more complex and vulnerable assets than in the past, and that the insurance industry has “struggled to keep pace” with this shift.
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What is the best paid sector for risk managers? How much do risk managers spend on broker services? What does a typical Airmic member look like? Airmic has revealed the results of its biennial Salary and Status Survey, read the highlights here. The industrial and manufacturing sector is the most lucrative industry for risk managers, according to Airmic’s 2016 Salary and Status Survey, which also revealed an overall fall in salaries across almost all age groups. 
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