Future of Europe's insurance and pensions in focus
Maintaining consumer confidence in insurance and pensions is critical given that both depend on long-term investments and trust. In addition, regulators and providers must take into account the impact of climate change and the importance of sustainability in their future business decisions.
These were some of the key messages from the European Insurance and Occupational Pensions Authority (EIOPA)'s eighth annual conference, held on 20 November in Frankfurt, Germany. With a firm focus on the future, other key topics for discussion included the supervision of cross-border businesses following the economic crisis; the relationship between insurance, pensions and sustainable finance; and the threats and opportunities presented by cyber risk and cyber insurance. 'More and more consumers are seeing the impact of our work on their daily lives,' said EIOPA Chairman Gabriel Bernardino in his keynote speech.
Stronger cross-border cooperation
An expert panel discussed how the internal market can be made to work for consumers. 'There are still limitations on the supervision of cross-border businesses, which means fragmented protection for policy holders,' noted Rimantas Šadžius, Member of the European Court of Auditors, who called for enhanced pragmatic European cooperation. Similarly, Kevin Thompson, Chief Executive Officer, Insurance Ireland called for 'harmonised standards in relation to conduct,' while Patrick Hoedjes, Head of Oversight Department, EIOPA, called for more information sharing between countries.
Monique Goyens, Director General, BEUC – The European Consumer Organisation suggested that authorities needed to go deeper into product design, while Henk Becquaert, Member of the Board Committee, Belgian Financial Services and Markets Authority said that supervisors needed to have a better picture of which products are actually on their markets.
Climate action is imperative
During the second panel discussion, Emily Shuckburgh, Climate Scientist, British Antarctic Survey told delegates that climate change presents an economic as well as an environmental threat. 'Transformational change is required,' she said. Molly Scott Cato, Member of the European Parliament, warned that 'if a long-term asset is not sustainable, then it will not have value.' Justin Wray, Deputy Head of Policy Department, EIOPA, noted that all investments will eventually need to be sustainable, while Guillaume Prache, Managing Director, Better Finance underlined the importance of having good long-term financial products on the market.
Christian Thimann, Chairman of High-Level Working Group on Sustainable Finance, European Commission and Chief Executive Officer & Chairman of the Management Board, Athora Germany agreed that it was important to translate commitments into concrete actions. Corien Wortmann-Kool, Chairman, ABP Pensionfund noted that 'environmental risks are investment risks.'
Addressing cyber threats
A third expert panel assessed the exposure and preparedness of the insurance and pensions sector to cyberattacks. André Baptista, voted the "Most Valuable Hacker", INESC TEC - Institute for Systems and Computer Engineering, Technology and Science, University of Porto, provided a brief snapshot of the security threats posed by sophisticated cyber hacker, while Nathalie Berger, Head of Unit, European Commission called for more threat information to be shared. Fiona van Echelpoel said that 'we need to go beyond operational risk management and look at governance and business processes at the highest levels.'
Fabrice Brossart, Chief Risk Officer, AIG Europe Ltd said that there was still confusion over cyber risk coverage, though people are increasingly aware of their own vulnerability. Anna Maria D'Hulster, Secretary General, The Geneva Association agreed that cyber risks are global and evolving, and discussed key challenges to the insurance industry. Ana Teresa Moutinho, Head of Supervisory Processes Department, EIOPA underlined that 'regulators need to let industry know what their expectations are.'
Lessons for the future
In the final keynote speech, Jens Weidmann, President, Deutsche Bundesbank noted that ten years after the financial crisis came to a head, we are still grappling with the fallout. He outlined some current challenges for insurers including low interest rates, but also identified positive developments such as Solvency II. The current financial regime is helping to mitigate systemic risk though new issues are emerging, he said. Fausto Parente, Executive Director, EIOPA noted that in order to address these future challenges, 'what we need above all is cooperation among actors and jurisdictions. There is simply no other way.'