Solvency II will highlight importance of good governance and technical expertise
Good governance and technical expertise will be essential under the new Solvency II regime, says Pilar González de Frutos, president of UNESPA—the Association of Spanish Insurers—and new chairman of FIDES.
She will be making these points in her presentation on the impact of regulation in the Spanish insurance market on day three at FIDES.
“These two features are the ones that will allow insurance undertakings to develop their own internal formulae and, hence, make a more efficient use of their capital,” she said.
She also stresses the importance of a fruitful and constant dialogue between insurance undertakings and the supervisory authorities.
“Mutual understanding is key to successfully running an insurance business under Solvency II. Here, transparency plays a key role. Insurance undertakings must be clear in all their dealings and contacts with stakeholders, whether these are supervisors, customers, investors, providers, etc.”
Incoming European regulations such as the Packaged Retail and Insurance-based Investment Product (PRIIP) Directive, the Insurance Distribution Directive (IDD) or the Institutions for Occupational Retirement Provision (IORP) Directive will strengthen the information requirements that insurers must comply with, she added.
“A similar process is going on with certain future Spanish regulations, for example, the new Spanish Insurance Contract Law and the Commercial Code.”
González de Frutos will also use her presentation to review how insurers can prevent and fight insurance fraud while observing the protection of personal data.
UNESPA was created back in 1977 and, ever since, it has acted as the mouthpiece of the insurance industry before a wide range of stakeholders, including governments, regulators, customers’ associations, trade unions and international forums.
It currently represents around 226 insurance and reinsurance undertakings that account for 97 percent of the premiums in the Spanish market.
“There are many multinational groups present in UNESPA through their Spanish subsidiaries and branches. Therefore, although strictly speaking UNESPA operates only in Spain, its points of view are heard through one channel or another all around the word,” said González de Frutos.
“The Latin American market presents the same challenges that have to face the rest of the insurance markets: an aging society, climate change, an increasing digitalised environment.
In any case, insurance undertakings worldwide should better convey their role as institutional investors and the role they play in creating sound and growing economies.”
Consumer protection should be also be more present at the heart of the insurance industry, she added.
“This is one of the reasons why FIDES’ members have signed the Carta de compromiso con el asegurado consumidor interamericano (Commitment letter to the inter-American insurance consumer). Now it is time to put it into practice.”
The Latin American market is full of potential, said González de Frutos. The insurance penetration ratio can be increased in a significant way in a range of different lines. She also sees the aging Latin American society as an opportunity.
“Insurers can collaborate with governments in the development of public-private partnerships in areas such as pensions or health services.”
New international standards coming mainly from the International Association of Insurance Supervisors (IAIS) by the aegis of the G-20 are conditioning local regulations, she added. New levels of capital requirements, different rules on governance and compliance are arising.
“After the financial crisis, we are all seeing a sort of regulatory tsunami.”
At FIDES González de Frutos expects the focus will be on analysing the effects of an aging society on life and health insurance.
“Big data, digitalisation and climate change should also require the attention of the insurance industry. And of course, FIDES will keep on working hard for microinsurance development.”
