- A more stable claims environment should contribute to a reduction in insurance premiums and an increase in the availability of insurance firms.
- Investment in technology, processes and people is required across all firms, to improve operational resilience, including in the management of outsourcing arrangements.
- The insurance sector needs to be more proactive in preparing for future risks, including those related to climate change, technology disruption, and the ageing population.
Speaking at the Insurance Ireland Annual Lunch, Ed Sibley, Deputy Governor, Prudential Regulation, discussed the critical role insurance serves in the functioning of modern societies, through protecting people and businesses against the risk of future events.
He addressed the challenges in the domestic non-life insurance market and their impact on businesses and consumers. Alongside actions aimed at reducing the frequency and impact of injuries, Deputy Governor, Ed Sibley said that he welcomed the measures being taken to address insurance claims costs and pressed for continued progress on actions to reduce the cost of insurance in Ireland.
He highlighted several key issues that are common across insurance firms, including Brexit, the need to improve the management of IT and outsourcing. Noting that outsourcing is a key feature of many insurers’ business models, including to intra-group service companies, he said, “in some firms, the levels of outsourcing are potentially excessive and bring into question the substance of the operation of the firm in Ireland. We have taken action to address specific instances where this is the case, and will continue to prioritise improvements in this area, including in the use of service companies.”
Mr Sibley also highlighted the “woeful lack of gender diversity at senior levels in the insurance sector”, noting that unlike many other sectors the insurance sector had gone backwards in 2018, in terms of percentage of female applicants for the most senior roles in insurance firms.
He concluded by discussing the risks and challenges facing the sector over the longer term, including those relating to climate change, demographics and technology risk. He said, “Thinking about our uncertain future and preparing for the opportunities and risks that it presents should be in the DNA of insurance firms. It is crucial that we see more of this thinking. Insurance is at the front line of so much of this uncertainty – be it climate change, technology disruption, or demographic changes. Not only does the insurance industry need to adapt to these changes, but it can also shape the wider societal response to them.”