Insurers welcome progressive regulatory reform

The new President of the Irish Insurance Federation (IIF), Mr Patrick Manley, welcomed the reform of financial regulation and the provision of additional resources to Mr. Matthew Elderfield, Head of Financial Regulation, Central Bank, at IIF’s Annual Lunch today. Mr Manley acknowledged the commitment of Mr Elderfield to the establishment of a dynamic and responsible regulatory system. He referred to the beginnings of a recovery in investment business and also referenced the resilience of the non

Mr Manley said, "We in the insurance industry are proud of our role as protectors, investors, employers and facilitators of economic growth and development. It is ironic that our collective corporate image is conservative and cautious, when the essence of what we do is all about assessing, accepting and absorbing risk. It is simply not possible for a modern economy to operate without a strong insurance sector, and we will continue - in Ireland and internationally - to provide the support and risk solutions that our customers, both personal and corporate, need. The industry has always played a major role in underpinning the stability and growth of the wider economy, as well as providing a financial safety net for individuals. As providers of capital to private industry we help to oil the wheels of the enterprise economy, in Ireland as throughout the world. More particularly, as experts in risk assessment and management and as providers of risk transfer solutions we give our customers mechanisms that allow them to manage and limit physical and financial threats to their businesses."

He continued, "The global economy has rarely been more nervous. Our world is tense and uncertain, as evidenced by a "technical glitch" knocking 9% off the Dow Jones last Thursday. The economic crisis has clearly exposed significant deficiencies in both the corporate governance and external supervision of parts of the financial services sector. Nevertheless, the insurance sector as a whole remains relatively healthy both in this country and internationally." To prove this he pointed to the ability of non-life members to absorb unprecedented weather-related losses in the last few months. The freeze and flood claims cost in excess of €1/2 billion, equivalent to nearly 60% of annual premium income from property insurance. "But, notwithstanding such shocks, combined with significant fall-offs in both life and non-life business volumes over the last couple of years - life new business volumes have declined by 30% in each of the last 2 years - the continued survival and competitiveness of our markets bear witness to prudent management and an effective supervisory system", he said.

"We face into a further period of great economic uncertainty....but there are some positives: single premium investment business did pick up in the first quarter of this year, and economic forecasts suggest the beginnings of a general economic recovery later in the year and through 2011. We also now have in place a new regime at the Financial Regulator and imminent reform of the EU's financial regulatory architecture. Implementation of the new Solvency II prudential supervision standards will match regulatory capital requirements to an accurate measurement of economic risk. All these developments give us good grounds for hope of a healthy future for our industry and its customers."

Mr Manley also welcomed the publication of the Government's recent pensions document, and called for early decisions to be taken on the reforms. He said: "It is understandable that the affordability of changes is under discussion and clearly this is conditioned by what is politically feasible and tied to the long-term resilience of the public finances." Acknowledging that questions arise around the long-term sustainability of public service pensions and the maintenance of the State pension, he said that, "just as justice delayed is justice denied, any further significant delay in implementing pension reform will be to the ultimate social and economic detriment of the country as a whole. The question is not "can we afford to reform the pensions system?" but rather "can we afford not to?".

Article Published: 10/05/2010