In the second of a regular focus on European insurance companies and brokers, Post Europe talks to the management of Vanbreda, the Belgium-based broker, which is part of the EOS Risq group.
1) How has the regulatory landscape changed in the country you work in over the last five years?
Due to the financial crisis and the impact on local large banks and insurance companies, the national and European controlling bodies/Insurance Commissioner and their internal organisation and authority came under pressure. The focus on Solvency II Basel II and EU competition legislation increased significantly.
2) What is your overall impression of the body charged with regulating the local insurance market in which you operate?
Has this improved or worsened in the last five years?
3) How much of a priority do you believe the local government in the territory in which you operate place on having a thriving insurance market?
It becomes more and more a European issue, and no longer an exclusive local priority. The biggest focus of local government is on local personal lines for individuals or households such a motor, life insurance etc…
4) 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”? Main focus of the public was/is on the banks since the financial crisis, because it is in that area that individuals were confronted with the largest exposures (savings, run on the bank,…) . In addition, pension funds were as well under a close watch due to disappointing investment results. Venture capitalists, hedge funds and other rather short term investment companies came under serious pressure.
5) 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?
This varies per line of business, i.e. most property & casualty insurance and marine business is already streamlined due to the global insurance companies. Most life insurance and person related insurance products can only be harmonised if the EU is able to implement fiscal and social harmonisation/legislation across the board.
6) How prepared do you believe the local market/markets in which operate is ready for Solvency II?
Local markets will probably only be prepared to further invest in Solvency II if it really helps them to comply with realistic solvency criteria imposed by local/EU authorities. If such a regulation results in a discrimination in favour of non-EU (read US) insurers, they’ll be much more reluctant to go all the way.
7) How has the global downturn impacted the wider insurance market in the territory in which you operate?
Are customers cutting back on cover? Are you seeing an increase in claims and if so in what areas? Contrary to widely belief and expectation, the economic crisis still didn’t result in a hardening market. It is rather the other way round where insurers go for market share and are still prepared to offer the widest coverages (low deductibles, high limits, all risks basis,…) at a very low price. There’s no need for customer’s to cut back on cover because the market already helped them to lower their annual premium spent. The paradox is though that on the claims side, we notice an increase of the notified claims (both gravity and frequency).
8) What is currently happening with regards pricing and insurance rates in the country in which you operate? How do you expect this to change over the next two years?
Based on the current situation, we do not expect a hardening market in the near future. Nevertheless, most of the triggers for a hardening market are already “activated”: Negative technical results of the insurers (2008-2009); Strongly reduced financial results (investments) of the insurers (2008-2009) due to the financial crisis; Insurance premiums at bottom level; Potential increase reinsurance premiums; Increase damages and losses due to human error; Increase of Eg and Fg of natural catastrophes; and reduced capacity insurers due to Solvency II requirements
9) What are the biggest issues facing your employer in terms of distribution?
Soft market with limited need for high level specialised technical advice (placing); Direct writers (insurers); Fee levels; Cost cutting consultants; Purchasing managers monitoring/steering the insurance purchasing process (RFP’s)
10) How much of an issue is broker remuneration/ disclosure for your company and its clients presently?
It is a limited issue.
11) How easy do you find it to recruit fresh talent? If there are any obstacles what are they?
Difficult to recruit good staff due to limited number of candidates : limited appetite to change employer, and if willing to do so, only at a high cost.
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