Lord Hunt says our industry needs recognition as a formidable creator of wealth
Last year saw the insurance industry hit the headlines again. As ministers boasted of a government support package that brought less than £20m to flood-hit areas, insurance companies were dealing speedily, efficiently and compassionately with more than 165,000 claims involving more than £3bn.
This is but one example of the vital role played by the insurance industry, which paid out £70m a day last year in general insurance claims, and just under £200m a day in pension and life insurance benefits.
The insurance industry here in the UK is the largest in Europe and the third largest in the world. It is a formidable direct and indirect creator of wealth: it enables individuals and businesses to manage risks and defend themselves against ruinous losses; and it is also a major exporter.
The recent turbulence in financial markets brought home the significance of financial services – and of insurance in particular – in all our lives.
At first glance, Berkshire Hathaway’s entry to the bond insurance market may seem no more than the expert application of a huge cash pile, but on further consideration it reveals the essential role insurance plays. Without a triple ‘A’ rated insurer behind municipal bonds, this particular form of local authority funding would soon dry up, or become prohibitively expensive.
Most enterprises need to borrow and need insurance, whether for instruments or physical assets. The economy would stop without insurance.
That is the reality, but we must nonetheless intensify our efforts in 2008 to ensure that our fellow citizens – and the makers of public policy in particular – recognise and acknowledge the vital contribution we make.
“Only a steadfast commitment to professionalism will ensure we earn the excellent reputation we need and deserve
This requires us to sustain the highest possible standards in all we do. Whether we are advising, broking, underwriting, selling, managing, dealing with claims, or are directly engaged in the supply of services, we must ensure we benchmark ourselves against the very best. Only a steadfast commitment to professionalism will ensure we earn the excellent reputation we need and deserve.
Meanwhile, the industry is entitled to demand a greater sense of urgency from government. Ministers must implement vital reforms to ensure the personal injury compensation system delivers care and compensation to personal injury claimants, quickly and efficiently. It would be a scandal if even the rather limited proposals in last year’s consultation papers on damages and claims processes were shelved or hit into the notorious Whitehall ‘long grass’.
Action is also needed to reduce future flood risk. Sir Michael Pitt’s interim report confirms the steps needed to improve Britain’s protection against flooding. Ministers must support his recommend-ations with action and money. It’s no good their demanding the insurance industry should do its bit, while sitting on their own hands at such a critical time.
At least some of those who have lost their company pensions are now to be compen-sated. This is very welcome, but underlying problems remain and I fear the current proposals for ‘personal accounts’ will lead to levelling down and, potentially, an overall reduction in the amount of pension provision.
The entire financial services industry has a role to play in ensuring that individuals take greater responsibility for their own lives and adopt a more mature and balanced approach to income, savings and borrowings.
All this amounts to a great opportunity for our profession to set the agenda and show the vision necessary to meet the challenges of a rapidly changing world. The message to the insurance industry has to be: your country needs you.
I wish all the readers of Insurance Times a very happy – and productive – 2008.