Current and future developments A perspective from the CEA European conference of the national institutes for professional insurance education Riga, 10 October 2008 William Vidonja Single Market & Social Affairs

Source CEA About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions

European insurance and reinsurance federation, founded in 1953 Committed to creation of favourable framework at European and international level Through 33 national member associations represents more than 94% of European insurance market by premium income About the CEA 3

CEA’s member associations 33 national member associations: 27 EU Member States + 6 non-EU markets Croatia, Switzerland, Iceland, Norway, Turkey, Liechtenstein 2 observers Russia, Ukraine 4

Contribution to the economy App European (re)insurers represented by the CEA Investing more than €7 284bn Generating premium income of €1 122bn Employing 1 million people

European Insurance in Figures Source CEA Real Growth (2007/06) Total premiums€998bn€1 086bn€1 122bn(+1.2%) Investment portfolio €6 541bn€6 994bn€7 284bn(+2.3%) NB: 2007 data are provisional  Almost insurance companies  App. 1 million employees Decrease in premium growth European insurers are large institutional inverstors Concentration of insurance companies High quality jobs

Stakeholders in the international environment European Commission European Parliament CFO Forum Council of Ministers EIOP C CEIOP S European Institutions International institutions IAIS IAS B OECD Insurance industry stakeholders CRO Forum PEIF AMICEICISA National insurance associations Insurance companies Other stakeholders RA B BusinessEurop e BEU C EFAM A etc.

Source CEA About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions

Recent developments & key trends Developments End of the welfare state What about the social dimension of insurance? ‘No‘ to the EU Treaty What about the EU citizens? On-going financial crisis What about the consumer? Impact on EU policy More ‘social‘ and ‘consumer‘ oriented 9

Source CEA About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions

Today’s and tomorrow’s social challenges Discrimination Social Dialogue Demography 11

Challenges EC proposal for a Directive on anti-discrimination, July 2008 Age, disability, sexual orientation and religion Social concerns in relation to insurance: access and affordability Process: Article 13 EU Treaty European Parliament (consultation) EU Council (unanimity) CEA’s response CEA‘s approach: differentiation rather than discrimination Insurance provision: « Member States may permit proportionate differences in treatment where, for the product in question, the use of age or disability is a key factor in the assessment of risk based on relevant and accurate actuarial or statistical data » - Art 2 para 7 Negotiation of a direct and clear exemption for insurance business 12 Discrimination

Challenges Maintain social peace in the insurance sector Launch of a formal sectoral committee at European level (ISSDC) Social partners: UNI-Europa / CEA, Amice, Bipar Foster understanding between employees and employers Jointly identify EU-wide issues of common interest Agree on common proposals to respond to these issues ISSDC’s responses Enlargement project Promotion of Social Dialogue across the EU Demography project 13 Social Dialogue

Challenges Attractiveness of the insurance sector Image of the insurance sector Attracting and retaining talents Work/private life balance Employability Qualifications and life-long learning Maintaining employability of the (older) staff and development of individual careers Exchange of practices, booklet, joint statement 14 Demography

Source CEA About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions

Today’s and tomorrow’s consumer-related challenges Green Paper on Retail Financial Services Collective redress IGS Distribution Information requirements BER 16

Green Paper on Retail Financial Services Green Paper on Retail Financial Services (30 April 2007) focuses on consumers: Empowering consumers: appropriate redress, financial education, information requirements Better working of the Internal Market for consumers: fewer barriers, more competition, more choice Enhancing consumers’ confidence in buying financial services abroad: legal certainty 17

Collective redress Challenges Main current problem is that consumers with small claims do not obtain adequate redress European Commission (EC) plans to come forward with an EU-wide collective redress system CEA’s response Need to avoid reputational and financial risks related to vexatious claims Develop ADR systems’ effectiveness 18

Insurance Guarantee Schemes (IGS) Challenges EC is assessing the need for an EU approach on IGS Trade-off needed, says Oxera Consumer protection vs costs/ funding Market confidence vs moral hazard Competition Policy options & IGS design options? CEA’s response Preference for measures preventing insolvency (SII) Need to analyse other mechanisms in place (AT, NL, etc.) Concerns about effectiveness of EU wide obligation to set up IGS 19

Distribution Challenges EC is assessing application of IMD EC has examined problem of intermediation provisions within business insurance inquiry how transparent is relationship between insurance company and intermediary for the client (commissions/fees)? Solutions vary between Member States CEA’s response Need for a solid stock-taking on current state of play Variety of distribution channels Avoiding conflict of interest - IMD as starting point 20

Information requirements Challenges EC‘s Green Paper on Retail Financial Services Many EU initiatives envisaged for 2008/9 from different DGs, EP and CEIOPS Focus on the life side: retail investors‘ protection purchasing competing products CEA’s response Need for practical solutions to put the consumer in a position to take appropriate financial decisions Quality instead of quantity – “simplified prospectus“ / KII Ease comparability Raise awareness of the need to address low financial education 21

Block Exemption Regulation Challenges DG COMP inquiry into business insurance EC not convinced of extending the current Block Exemption Regulation (BER) when it expires in 2010 On-going consultation – EC report by March 2009 CEA’s response The BER needs to be renewed: Pro-competitive nature of exempted forms of cooperation The BER offers a ‘safe harbour’ - legal certainty 22

Block-exempted forms of cooperation Joint calculations, tables and studies Standard policy conditions (SPC) Pools Security devices Valid until 31 March 2010 The BER is under threat 23 Block Exemption Regulation

Block-exempted forms of cooperation Foster competition - Benefit to small/ medium-sized insurers & new entrants - Positive effect on cross-border competition Promote customers’ interests - Specifications facilitate consumers’ mobility - SPC permit comparability of products - Pools allows insurability BER’s benefits Offers a ‘safe harbour’ Provides legal certainty Avoids divergent interpretations of antitrust regulation Without the BER: risk seeing cooperation cease due to prudence & benefits of horizontal cooperation will be lost 24 Block Exemption Regulation

Source CEA About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions

CEA is highly engaged in EU internal market and international debates CEA supports a better regulation approach to proposed legislation CEA very much values its contacts and dialogue with other stakeholders Some challenging debates lie ahead The ’consumer’ and ‘social’ trends are two major challenges ahead for the insurance sector 26

CEA publications CEA Annual Report European Insurance in Figures European Motor Insurance Market Reducing the Impact of Climate Change The Environmental Liability Directive Solvency II publications

For more information 28 CEA aisbl Square de Meeûs 29 B-1000 Brussels