In the latest of a regular focus on European insurance companies and brokers, Post Europe talks to Theo Van Der Mark, managing director of Jubilee Europe BV, part of the Jubilee Group about the Dutch insurance market.
How has the regulatory landscape changed in the country/countries you work in over the last five years?
For the Netherlands, the main changes concentrate on the treating customers fairly principle and follow, by and large, the UK changes over the past years.
In addition, certain covers related to financial products - such as mortgages and loans - have been classified as ‘complicated products' and a separate set of rules have been drafted. These include transparency of commissions or fees, which simply means that a customer agrees beforehand to the commission of the intermediary which is mentioned in the policy document, and the obligation is on the intermediary to provide the customer with fair and solid advice, with no particular preference for one insurer but based on the suitability of a product for a specific client.
What is your overall impression of the body charged with regulating the local insurance market/markets in which you operate? Has this improved or worsened in the last five years?
Most of the changes are a direct result of the unacceptable sales techniques being used by intermediaries in a certain segment of the market. For this reason, you cannot say that regulatory changes were uncalled for.
However, a valid argument is that the changes should have been implemented over a longer period of time. Many feel that there has been an over-reaction.
How much of a priority do you believe the local government places on having a thriving insurance market?
There is little evidence of the Dutch government having any strong interest in supporting or helping develop the local insurance market.
How is the insurance sector generally viewed when compared to other parts of the wider financial services sector such as the investment and banking communities? Has this changed in light of the economic downturn, which has widely been labelled the ‘banking crisis'?
By nature, the insurance sector has always been viewed on a par with the banking and other financial services, often jointly coming under the less than flattering description of a ‘necessary evil'. However, the cause of the economic downturn is predominantly blamed on the failings of the banking industry and not the insurance sector.
If, and when, do you think we will ever see a single common market across Europe in which insurance is sold on a truly pan-European basis?
Not for a long time. Many differences exist between the individual underwriting methods and products, not to mention the possibility that it would take away a healthy, local competitive market. Two or three major pan-European insurance companies would rule which, in my opinion, is wrong.
How prepared do you believe the Dutch market is ready for Solvency II?
The Netherlands is a mature market and, in the past, has shown that it is relatively quick in accepting and adapting to changes concerning regulatory matters at a European Union level.
How has the global downturn impacted the wider insurance market in the Netherlands? Are customers cutting back on cover? Are you seeing an increase in claims and, if so, in what areas?
Our main product, the payment protection cover for mortgages, has seen a drop in production over the past two years of at least 30-40%. No surprise here as this percentage is comparable to the drop in mortgages in the Netherlands. As the cover includes an unemployment benefit, we have seen a substantial increase in claims, which have not shown any improvement yet.
What is currently happening with regards to pricing and insurance rates in the Netherlands? How do you expect this to change over the next two years?
With the economy in a sad state and personal lines rates being very soft; I can't see any improvement for the next year or so.
What are the biggest issues facing Jubilee in terms of distribution?
The changing regulatory environment has meant larger numbers of smaller brokers have been put off offering their clients our products. For many the level of fee does not weigh up against the paperwork and administration involved.
How much of an issue is broker remuneration/disclosure for Jubilee and its clients presently?
It is a major issue and, as the Dutch market is in the initial stages of the new regulation to disclose fees, we are working closely with our intermediaries to ensure that disclosure requirements are being met and that the correct controls are in place.
How easy do you find it to recruit fresh talent?
It is very difficult. In these uncertain times, people tend to stick to their current employer rather than risk going on a new ‘adventure'.
Which of these insurance distribution model/s do you believe has the brightest future in the market/markets in which you operate, and why?
a) Intermediated/brokered sales
b) Direct sales
c) Online sales
d) Insurance sold through a third party such as bank
e) Tied agents
All of these models will have a role in the future but I believe that in the Netherlands intermediated/brokered sales will remain a major distribution channel. Online sales have the ability to grow in the future - they are not yet big in the Netherlands.
Sales of insurance through a third party such as a bank are treated by the Dutch regulator in a similar fashion to sales by brokers. In either case, the regulator will keep a close watch on the advice given to the client, making sure that ‘outside' options are taken into account as well.
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