An apparent lack of understanding about our sector means a European single market is still some way off
Marriage to a Dutch woman for 38 years means I have developed a serious interest in European life and culture. The Scots and the Dutch have much in common – we both come from small countries, have a healthy respect for watching the pennies and our languages are somewhat guttural (although I’ve always thought the Dutch language sounds more like a throat disease – sorry darling).
Our shared values brought us together, but it is where the similarities end that makes things interesting. Doing business in the EU, with its many legal and cultural differences, is not so dissimilar. Sometimes, however, a European single market seems a very long way from completion.
There is a strong desire within the European Parliament to promote cross-border initiatives that facilitate business. Unfortunately, the reality is often very different and frustrated by what I regard as unnecessary distractions and a lack of real understanding about our sector.
Strange and expensive EU initiatives ruin the credibility of what should be a genuine attempt to create a strong, competitive and secure general insurance and reinsurance environment for individuals and businesses.
Take, for instance, the European Commission’s sector review of business insurance a few years ago. This cost the sector tens of millions of pounds to respond to and, in my opinion, could have been solved by just talking to the sector.
Then there is the recent advocate-general’s opinion that statistical gender data should not be used in underwriting, when we all know it has relevance as a risk indicator. It is not the first time the idea has emerged from Europe. Unfortunately, it seems to have legs this time and could well have an impact on general insurance underwriting criteria. It eats away at the fundamental risk-based element of our sector. The impetus comes from a Belgian consumer body and could be passed into law without any consultation with the sector – not what I regard as a transparent and equitable process.
Meanwhile, the Insurance Mediation Directive (IMD) is being revised. The revision is a priority in Biba’s lobbying efforts in 2011. In Europe, our lobbying is being carried out in collaboration with BIPAR (the European federation of insurance intermediaries), which has the challenging task of bringing 27 countries’ views on intermediation to an acceptable and cohesive conclusion.
Your views are being robustly represented to the people that matter. We believe that any firm undertaking a mediation activity for business should be included within the scope of the directive. It should not be just the insurance professionals being regulated and the rest left out. We believe the customer should be entitled to the same suite of disclosures regardless of where they buy their insurance. And last but not least, IMD II will provide for greater transparency – we believe that our current “on request” regime is the most appropriate of the likely options.
Europe is a major element in our lobbying activities, but it must be put in perspective. Our top priority relates to the changes occurring within the UK regulatory framework, the spiralling costs of regulation and, more specifically, the funding of the Financial Services Compensation Scheme.
We have an opportunity to achieve more appropriate, proportionate and cost-effective regulation in the UK, which will only be achieved through a dialogue between the sector, the regulator and the policymakers. But just as in any partnership, marriage included, communications need to be clear, considered and timely, with understanding on both sides, if it is to prosper. IT
Eric Galbraith is chief executive of Biba.