Current and future developments A perspective from the CEA

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

2. About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions 1 1 2 3 4 5 Source CEA

3. About the CEA • 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 3

4. 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

5. Contribution to the economy Investing more than €7 284bn Generating premiumincomeof €1 122bn Employing 1 million people App. 5 300 European (re)insurers represented by the CEA

6. European Insurance in Figures Decrease in premium growth European insurers are large institutional inverstors NB: 2007 data are provisional Concentration of insurance companies High quality jobs • Almost 5 300 insurance companies • App. 1 million employees Source CEA

7. Stakeholders in the international environment European Institutions International institutions Council of Ministers IAIS IASB European Parliament OECD European Commission EIOPC CEIOPS National insurance associations Insurance industry stakeholders Insurance companies Other stakeholders RAB PEIF CRO Forum BusinessEurope BEUC CFO Forum AMICE ICISA EFAMA etc.

8. About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions 1 2 2 3 4 5 Source CEA

9. 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-goingfinancial crisis • What about the consumer? Impact on EU policy • More ‘social‘ and ‘consumer‘ oriented

10. 3 About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions 1 2 3 4 5 Source CEA

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

12. Discrimination 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 directand clearexemptionfor insurance business 12

13. Social Dialogue 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

14. Demography 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

15. 4 About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions 1 2 3 4 5 Source CEA

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

17. Green Paper on Retail Financial Services • Green Paper on Retail Financial Services (30 April 2007) focuses onconsumers: • 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

18. 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

19. 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

20. Distribution Challenges • EC is assessing application of IMD • EC has examined problem of intermediationprovisions within business insurance inquiry • how transparent is relationship between insurance company and intermediary for the client (commissions/fees)? • Solutions varybetweenMember 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

21. 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

22. 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

23. Block Exemption Regulation • 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

24. 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’sbenefits • 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

25. 5 About the CEA Recent developments & key trends Social challenges ahead Consumer-related challenges ahead Conclusions 1 2 3 4 5 Source CEA

26. 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’ trendsare two major challenges ahead for the insurancesector

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

28. For more information www.cea.eu CEA aisbl Square de Meeûs 29 B-1000 Brussels