I've just got back from visiting insurance companies in the US. It was a fascinating case of “the same, only different”. Like us, American insurers grumble about too much regulation. I can see their point. They face different regulators in each of the 50 states – many of them elected with an agenda to live up to. Not only that: regulation US-style is product and tariff-based. I almost found myself preaching the virtues of the FSA.
And, in fact, the idea of a US-style FSA may not be so far-fetched. There's a big decision to be made about whether to carry on with the state-by-state system, or whether to introduce a new, federal regulator. Some firms are nervous about the “big brother” in Washington, but others believe the current fragmented system just can't last.
Even more than us, Americans are pre-occupied with ecommerce. It's revolutionising business-to-business transactions. But it's expected to have only a modest impact on personal lines. The old truth that a customer needs someone to talk to still holds good – even in Silicon Valley.
However, online customer care does have huge potential. Web-based claims tracking and 24-hour quotes might help convince customers that good service is worth paying for.
Americans are getting older – just like us. The baby boomers are saving like crazy and they want the best possible returns. Even the politicians are at it: Clinton, Bush and Gore all promise to invest part of the federal pension fund on the stock market. .
Also, too many Americans rely on social security to keep them in their old age. Younger US taxpayers just can't afford to keep the older generation in comfort – and the government must find a way to encourage everyone to save more.
Consolidation is the buzz-word across the pond, just like here. American insurers are buying and being bought. Last year, Congress decided to let banks buy insurance companies – and vice versa. More frenzied acquisitions on the way.
Americans want their financial services industry to be socially responsible – sounds familiar? Lots of talk in the US Treasury of the evils of red lining and the benefits of community investment. And it's not just talk. They're putting their money where their mouth is. Banks can get grants to provide new services to poorer people. Not only that: banks and thrifts (the US equivalents of our building societies) are publicly scored on their record in making financial services available to low income groups.
Last but not least, American insurers are worried about losing business to countries with lower rates of tax, as well as disputing among themselves whether it's fair game to seek out the tax advantages of Bermuda and other offshore havens.
Some years ago, the US Internal Revenue Service brought in discounting of claims reserves to get more tax out of general insurers. Now that's driving business offshore. ABI is fighting hard against similar changes here, and we are making some headway. If we don't, we too will soon be worrying about losing business from the UK.
Well, my travels are over for the time being. I'm working on ABI's new chairman, Bob Scott, to send me next to his old stamping ground – Australia.
