Paul Donaldson, chief executive of Royal & SunAlliance, tells Christine Seib his hopes and concerns for the Irish insurance industry for the coming year.
What has been the most significant event in the insurance industry in the past year?
It has been the Insurance Act 2000, which came into effect in January 2001. It was quite a significant milestone for the insurance industry, because it transferred the regulation of intermediaries to the Central Bank, starting from April 1. You have to welcome it, because the Central Bank will apply independent rigour to registration and regulation and it's a significant step towards the Irish Financial Services Regulation Authority (IFSRA).
It's important we establish a world-class system to regulate our affairs and maintain our international standing.
Of course, for the life market, we changed to gross roll-up for exit tax. It's putting us on a par with our International Financial Services Centre (IFSC) companies, which are trading on a pan-European basis.
What are the biggest challenges facing the insurance industry in the coming year?
We're facing an era of customer empowerment and it's necessary we continue on our journey of transparency. It's important we engage our customers' concerns about higher premiums and what the industry is doing about rising claims settlements. Other issues are road and workplace safety in non-life and the new issue of personal retirement savings accounts (PRSAs) for the life sector (see page 22).
What part can industry bodies play in these issues?
They're an important source of information and comment and they have a mandate to reach ever-increasing standards from participants in the market. The Irish Insurance Federation (IIF), the Irish Brokers' Association (IBA) and, to a lesser extent, the Insurance Institute of Ireland (III) must engage public opinion and inform the legislators on issues that have an important bearing on society. They have to ensure their staff are well trained and competent to deal with customers' needs.
What would the industry like to see from government in the coming year?
I'd really like to see swift implementation of the Road Traffic Bill 2001 and resources to supervise the new penalty points system. As a nation, our road safety record is a disgrace and the human toll is unacceptable. Our vested interest is the reduction of road casualties because, apart from the human price, the cost to law-abiding motorists and the insurers that transact motor insurance on this island is very high. The only long-term answer is the rigorous enforcement of the rules of the road.
I also fully support the Personal Injuries Assessment Board. I see it as a tangible effort to control legal costs, which currently add 20% to 40% to the cost of injury claims. I'd like to see the IFSRA established quickly and the enactment of the Pensions Bill, including the provisions for the PRSAs, in a less administratively cumbersome environment.
What message should the industry try to communicate to the public in the future?
The message to the public is that we're acting with their best interests and that we're there when life's misfortunes come their way, to serve in a fair and honest way. Quality service is a key building block. The slight easing in the employment market will challenge us to shift the emphasis from chasing new staff to up-skilling people, to providing the quality service the public demands. The III has an important role to play, in conjunction with employers, in pushing this agenda.