Led by growth in Asia Pacific, the global insurance industry has been experiencing moderate growth in recent years. However, a slowdown in the industry is likely, though growth is going to remain steady.

While the life insurance sector remained the most profitable in 2015, the non-life insurance sector was not far behind, according to Global Insurance Industry - Forecast, Opportunities & Trends 2015-2020, a report recently released by Taiyou Research. The industry remains fragmented, thus increasing the level of rivalry within the market. Large, international companies have more or less entered most countries now and have either driven many smaller players out of business or have formed partnerships with them.

Online insurance is also a rapidly growing business, competing successfully with existing players. Apart from insurance market players, many financial service providers and banks are also entering into the global insurance business, thus creating even more competition for existing players.

Stringent regulations govern the insurance industry and it remains to be seen how this scenario plays out in the coming years.

(Source: Taiyou Research)

GTR spoke to insurers and brokers at the annual conference of the Association of Trade Finance in the Americas (ATFA) on how the insurance market has evolved in the US since the financial crisis.

Next up we spoke to Alan Maresky, Chartered Accountant by profession, who is currently Chief Financial Officer at Pethealth Inc. Pethealth is an international leader in the provision of animal management software, RFID microchip identification, database related services for companion animals, and pet insurance, operating in North America and the United Kingdom. More recently, the company became a leading provider of pet pharmacy and pet specialty retail products to pet owners in the United Kingdom and Germany. Here Alan tells us more about the company’s achievements and regular challenges, as well as his role and its impact over the past two years.

What are Pethealth’s top priorities towards its clients?

Everything we do is driven by our mission of bringing vitality to lives, furry and otherwise. We aim to be a one-stop shop for all pet needs. In North America, that includes pet insurance, lost pet recovery services and memberships in a community that provides, not only a forum to share and learn more about pet ownership, but also access to special offers and promotions generated by our partners. In the UK, we have a discreet pet health insurance offering, as well as pharmaceutical, specialty food and pet retail services.

What differentiates Pethealth from its competitors?

Pethealth has a maniacal focus on customer service and employee satisfaction. We believe that having happy employees results in a better experience for our customers and clients.

What further goals is the company currently working towards?

We are constantly looking to improve internal processes to become more efficient and provide an improved customer experience. The way people choose to do business is evolving every day, as we service a wide audience, it is important that we stay up-to-date. We want to continue to expand – our current goal is to grow our pet insurance and the online retail platform in the UK and Europe.

Our membership offering in North America is a collection of the products and services pet owners have come to rely on to provide the premium level of protection for their pets. At the moment we see massive growth potential for this Membership in North America.

You joined Pethealth in 2015 - how would you evaluate your role and its impact over the last two years?

My time at Pethealth has been full of surprises – no two days look the same. My team and I spend most of our time addressing our internal processes and systems. We have also made a number of significant acquisitions, both in North America and the UK, which have bolstered our portfolio. With our most recent acquisition in Germany, we have expanded our footprint into Europe.

I play a key role in a wide range of initiatives at Pethealth. In addition to the Finance Team, many other departments report into me. The impact of having these different departments working together towards our shared goal has had immeasurable impact.

We believe that we have tremendous growth potential and are excited to be part of the Fairfax group of companies. With the insurance penetration in North America being less than 3%, there is significant upside awaiting in the untapped market. We have a proven model within the e-commerce platform in the UK that I see a tremendous potential in and the recent expansion into the German market will, hopefully, be the catalyst to growing in Europe.

What challenges would you say you and the firm encounter on a regular basis? How are these resolved?

Our internal systems are in need of a renovation. This makes keeping up with the demands of the business a challenge. I don’t think that we're ‘nimble and flexible’ enough from an administration perspective. By making these adjustments on the back end, we are able to work more effectively and efficiently.

From a legislative point of view, the regulatory restrictions in the US pet insurance industry make any changes to our offering very onerous. Each state is independently regulated, so it is challenging to provide a single countrywide offering with a streamlined process. Any changes to our policies need to be approved on a state-by-state basis. which can take up to 18 months. This makes it difficult to react to market changes, however on the flip side, it acts a big barrier to enter the market.

March is Fraud Prevention Month and Insurance Bureau of Canada (IBC) is highlighting that everyone can play a role in limiting the personal and financial costs of auto insurance fraud.

"Auto insurance fraud is a serious crime that costs Canadians billions of dollars each year," said Garry Robertson, National Director, Investigative Services, IBC. "It's an illegal, organized big business, largely unknown to consumers, that siphons resources away from our health care system, ties up our emergency services and courts, and drives up insurance costs."

The property and casualty (P&C) insurance industry is increasingly sophisticated in its ability to detect and prevent insurance fraud. This includes fraud perpetrated by organized crime rings that stage collisions and involves the collusion of service providers such as medical facilities, auto body shops, and tow truck operators. IBC and P&C insurers work closely with CANATICS, an organization that uses state-of-the-art analytics technology to help insurers identify possible fraudulent activity committed by these dangerous crime rings.

IBC and P&C insurers also work across Canada with law enforcement agencies, all levels of government, insurance broker organizations and other stakeholders to raise awareness and coordinate efforts to fight this crime.

"Insurers and their partners are already playing a significant role in reducing instances of auto insurance fraud. However, it is important that consumers know what to look for and to avoid becoming victims," added Robertson.

Consumers can help protect themselves against fraud by following these tips:

Do your homework when purchasing a used vehicle:

• Select a reputable dealer and look into the vehicle's history. If the deal seems too good to be true, it probably is.
• Inspect the vehicle you're considering buying to make sure it wasn't in a flood. Check for water stains and mildew. Also look for sand or silt under the carpets, floor mats and headliner cloth, and behind the dashboard. Look for rust on the screws on the console and in other areas where water doesn't normally reach.
• Check IBC's VIN Verify Service. This service helps you make sure the vehicle hasn't been fraudulently given a new vehicle identification number (VIN) to hide that it was previously branded as non-repairable.
• Have a certified mechanic inspect the vehicle before you buy it.

Avoid staged collisions:

• Never tailgate; instead, allow ample distance between your vehicle and the vehicle ahead of you. Look well beyond the front of your car while driving.
• If you suspect that you have been a victim of a staged collision, call the police from the accident scene and use IBC's tip reporting program. Notify your insurance representative immediately.

Take extra care if you are involved in a collision:

• Document all that you can. Write down the other vehicle's licence plate number, collect driver's licence and insurance information, photograph the damage, note the other driver's behaviour and watch for warning signs of a scam. Fill out the IBC collision report form.
• Use a reputable tow truck service. Be sure the tow truck has a licensing number. Carefully read anything you are asked to sign. Ask that your vehicle be towed to a secure location of your choosing.
• In the event of a collision, call your insurance representative as soon as possible.

If you think you have witnessed or been the victim of an insurance crime, call IBC's confidential TIPS Line (open 24 hours a day, seven days a week) at 1-877-IBC-TIPS, or submit an anonymous tip to IBC online.

IBC Initiatives to Identify and Deter Fraud

• IBC TIPS Line and online tip form: IBC provides a webpage and toll-free phone number to allow consumers to anonymously report insurance fraud.
• Provincial Auto Theft Network (PATNET): This award-winning IBC program brings together law enforcement agencies and the insurance industry to reduce auto theft and insurance fraud.
• VIN Verify Service: This free IBC service allows consumers to check a database containing information from participating IBC member insurance companies to determine whether a vehicle has been reported as being seriously damaged in a flood.

(Source: Insurance Bureau of Canada)

To hear about the insurance industry’s evolution in the past 40 years, this month Finance Monthly reached to Joseph Petrelli. Mr. Petrelli began his insurance career in 1969 as a work study student at The College of Insurance, working for the predecessor organization to ISO. Since that date, he has been providing both actuarial and financial analysis expertise to the Property and Casualty (P&C) insurance industry. He has been actively engaged in the Title insurance industry since 1985. He has experience with loss and loss adjustment expense reserve evaluation, product development, and pricing for all P&C and Title insurance products as well as expertise with loss cost filings and Financial Stability Ratings^® (FSRs).

 Prior to founding Demotech, Inc. in 1985, he was employed by a large national P&C insurer, a regional property and casualty insurer, as well as Insurance Services Office.

 Mr. Petrelli is the author of What We’ve Got Here Is a Failure to Communicate – How Traditional Financial Reporting Contributes to Misunderstanding of Title Insurance Loss Activity and has been published in many of the leading industry trade journals.

 He is a Member in good standing of the Casualty Actuarial Society, American Academy of Actuaries, Society of Actuaries, and the Conference of Consulting Actuaries. Mr. Petrelli has a Bachelor of Actuarial Science from The College of Insurance (St. John’s University) and an MBA from The Ohio State University.

You have more than 40 years of progressively responsible property and casualty actuarial and financial analysis experience - how has the industry evolved over time?

The insurance industry’s evolution over the past four decades has been driven by the two concepts underlying Demotech’s name; demographics and technology. Demographics has impacted the life, health, property, casualty and title insurance sectors. Many life insurers now have clients that have lived to be 100 years old!  Whether the issue is the graying of the insurance industry, the transition of leadership positions from Baby Boomers to Millennials, changes in the generational perspectives with regard to homeownership, telecommuting, personal, face-to-face service versus online efficiency and the implied cost savings of same, or 80 and 90-year old men and women having the physiological capability to live independently with a quality of life that is unprecedented: demographics is the driving force behind the evolution of the industry.

Similarly, technology has been instrumental in enhancing physical safety and ecological efficiencies; whether through automated safety apps that protect one’s home and contact you via smart phone when the doorbell rings or thermostat controls on a smart phone app. Concurrently technology offers challenges associated with cyber security and cyber bullying that emerged over the past several years.

Can you tell us a bit about the Financial Stability Ratings^® that Demotech offers?

Financial Stability Ratings® (FSRs) summarize our unique perspective on an insurer’s ability to honor meritorious claims or otherwise defend the policyholder.  “Stability” is the key variable that financial strength ratings often fail to measure. Stability implies that an insurer is focusing on core capabilities and sticking to its knitting. The best way to stay out of trouble is to do what you know how to do.

Other rating services seem to believe that possessing an abundance of capital concurrently provides the experience and expertise to assimilate into lines of insurance or geographical areas that are unfamiliar to the insurer. Stability and a focused and executable business plan are the keys to survival.

How do you tailor your services to the needs of each individual client?

We do not rely on black boxes, secret formulae or subjective criteria to assign our FSRs. We believe that ratings should be transparent and fair. In fact, we have created the phrase, Transfairency to describe our process. Tranfairency refers to a review and analysis of insurer financial stability that is fair and transparent. We believe that a process is fair when review and analysis focuses on balance sheet fundamentals presented over time, the quality and quantity of reinsurance, the carrier’s business model and the breadth and depth of its enterprise risk management program.

In terms of market competition, where does Demotech stand globally and what are its goals moving forward?

In the area of insurer ratings, as opposed to the rating of insurer investments and debt obligations, the reality is that a monopoly exists in insurer ratings. Despite the existence of a monopoly and the restraint of trade or boycott of duly licensed insurers that it creates, we have more than 400 clients operating in the US, District of Columbia and Commonwealth of Puerto Rico. We chip away at the monopoly each and every day for the purpose of leveling the playing field for financially stable insurers.

Insurance services represent an opportunity for banks to improve customer experience and increase customer loyalty.

Consumers have an average of four different insurance products split across three providers, with 63 percent saying they would prefer to deal with a single provider, according to a new survey by Collinson Group.

Following the rise of price comparison and aggregation services, the way people buy insurance has fundamentally changed – competition is fierce, prices are lower and consumers use multiple providers. However, Collinson Group research amongst 2,500 loyalty programme members has found that customers would value a more streamlined way to buy insurance through a single provider. Banks can capitalise on this opportunity by offering insurance products through loyalty initiatives, or value-added packaged accounts and credit cards – improving the customer experience, boosting loyalty and generating incremental revenue.

When asked why they would prefer insurance products with a single provider, 79 percent cited convenience. More than half (51 percent) said they would expect better prices for staying loyal and 39 percent said they would expect to receive added benefits or rewards for staying loyal to one provider.

When asked why they use multiple providers, more than a third (37 percent) said their provider doesn’t offer different products, and more than a quarter (27 percent) said they don’t feel there is any benefit for staying loyal.

An additional Collinson Group’s global study of more than 6,000 affluent middle class customers further emphasises the opportunity for banks, showing a high perceived value of insurance products. The findings found that 72 percent of affluent middle class customers highly value health insurance, 66 percent travel insurance and 63 percent lost cards assistance. Banks should also consider other non-traditional assistance products such as identity protection, to help in the modern age of cyber-crime. The research found that 57 percent of customers rated identity theft protection as a highly valuable service, and that fears over data security influences what brands or products they use. Offering identity protection insurance is another way banks can show commitment to customers.

Mark Roper, Commercial Director of Collinson Group said: “Banks have an opportunity to boost loyalty and make consumer’s lives easier by including insurance products in loyalty programmes or within packaged accounts and credit cards. Given the data banks hold on consumer spending, using this information at the right time to offer highly personalised, timely and relevant insurance products would be valued by customers and can also generate incremental revenue for banks.

“Due to their substantial buying power, banks can achieve economies of scale to deliver value across insurance products and pass this back to their customers. They can offer insurances at the low prices their customers expect due to  a group risk approach, packaged as part of a bank account or credit card. This will provide differentiation and builds on or leverages existing loyalty to the bank’s core products –bank accounts or credit cards.

“With effective integration, banks could offer travel insurance to a customer that has just booked a flight, or car insurance when they buy a new car. This will be well received by customers who indicate in the research that relevant offers are welcome, and by consumers that like the idea of a ‘one stop shop’ but need to feel that the provider offers great value and quality products. Banks should be capitalising on this consumer need by seizing the opportunity to create more meaningful and deeper emotional relationships with their customers, and grow their bottom line.”

(Source: Collinson Group)

This month’s CFO Insight section features Mark Hampton – the Chief Financial Officer of Collinson Group, a global leader in influencing customer behaviour to drive revenue. The company brings together a unique blend of industry and sector specialists across four core capabilities: Loyalty, Lifestyle Benefits, Insurance and Assistance. Collinson Group is the organisation that created Priority Pass, the first independent global airport lounge access programme and was the first to sell travel insurance directly in the UK through Columbus Direct. The firm also created the first loyalty marketing agency, ICLP. Now, Collinson Group operates 25 offices across the globe, supporting more than 800 clients, in over 170 countries, and manage more than 20 million end customers.

 Mark’s role as a CFO is not simply financial control and management – he drives the group’s overarching strategy, both by contributing to its development and by ensuring the plans are robust and that sufficient financial and human resources are available to deliver them. He also drives the Group’s merger and acquisition strategy, has responsibility for Human Resources, Legal, Information Security and PMO across the group, and is Non-Executive Chairman within the insurance business.

Collinson Group is currently going through a period of rapid growth – what have been the company’s major achievements in 2016?

 Once again the group has reached new highs with revenues of £420m, up 20% over the previous year and the fifth year in a row in which we have experienced annual double digit revenue growth. This is testament to the strength of the business, and puts us in the position to continue to invest in new technology and capabilities.

This year’s success has been underpinned by strong organic growth of existing clients and the successful launch of new propositions. Looking at specific achievements, we have gained a lot of traction with our loyalty commerce product suite, helping organisations generate incremental revenue from their loyalty programmes along with driving increased customer engagement. Our loyalty platforms integrate with over 4,000 retailers, offering in excess of 6,000 rewards globally, across 40 product categories including travel inventory from 400,000 hotels and 120 major airlines. Working in partnership with our clients, we have advanced our data analytics to optimize both behavioural and contextual data to provide highly relevant and personalised content that delivers value to programme members globally.

We have both expanded our global client base across the Americas, Asia-Pacific and the US along with our partner networks to deliver truly international benefits that reflect the needs of modern travellers. Our growth ensures that we are able to offer our clients best in class technologies, regional expertise and continued economies of scale.

We have facilitated significant digital transformation in our client businesses and we have doubled the size of our data and insights team to provide business intelligence and enhanced customer experiences for our clients end customers and to better serve our own direct customers.

Our independent lounge access programme passed a significant milestone this year, offering members access to 1,000 lounges globally. And our LoungeKey product offers the swiftest and most secure payment-card and digital airport access programme worldwide.

We also introduced an ID Assistance solution this year which provides protection against identity loss, theft or fraud offered wholesale/ as a package or NAC benefit or a retail solution. This benefit demonstrates a commitment from organisations to ID security and can generate incremental income for brands.

Collinson Group also launched Care and Support at Home, a unique product in the UK insurance market that seeks to help financial services companies provide comprehensive at-home assistance services for millions of Britons who struggle to receive adequate care after a period of hospitalisation.

Our insurance and assistance businesses will now benefit from a single, enterprise-wide platform, enabling transparent visibility of financial flows from policy sales through to claims management. Powerful management information will drive benefits across the business, including more accurate underwriting, improved product targeting, and more efficient allocation of customer service resources

Looking into 2017 and beyond, what do you anticipate for the company?

 Collinson Group’s growth is expected to continue over the next decade, fuelled by the strength of the mass affluent consumer, increased consumer expectations and a dramatic rise in customer data availability. This growth is likely to be particularly strong within financial services and travel, where we continue to focus our investment.

The advance of technology, the exponential growth of personal data and the increasing complexity of customer interactions will continue to drive demand for leading expertise in our specialism of shaping consumer behaviour. We will invest in new propositions and improved infrastructure, to fuel sales growth, increase efficiencies, and build a stronger, more collaborative structure across our global footprint. Our continued investment in digital and data resources, and in upgrading legacy systems will ensure that we fend off the ever-strengthening competition that globalisation presents.

We will continue our expansion of digital platforms including LoungeKey 2.0 and loyalty platforms to further digitalise the customer experience.

What are currently the hottest topics being discussed in the loyalty sector in the UK? What motivates you most about working within the field?

 Loyalty and influencing customer behaviour is an exciting field to work in. It’s becoming increasingly important for brands, as the only real way to differentiate in a very crowded market. Loyalty is fast moving and dynamic with customers demanding highly personalised experiences, so my personal motivation and passion to continue in our broad depth of capability across the Group is high.

The loyalty landscape is changing at a rapid pace. The industry has shifted from generic reward models based on points and prizes, to something that is highly bespoke, contextually relevant, real time and digital. Our proprietary research shows that consumers are less attracted to simple discounts; they value lifestyle experience above all. They want seamless and personal customer experiences across all channels and they want personal, money can’t buy experiences as a reward for their brand loyalty.

 This shift is being powered by the availability of digital tools and data analytics, and some organisations are still coming to grips with how to get the most out of these tools. The aggregation of data across almost every channel, presents a powerful opportunity to build meaningful relationships with consumers. Organisations that are not using data insights as an opportunity to personalise their programmes will almost certainly be left behind.

You joined Collinson Group in 2013 - what goals did you arrive with as a CFO of Collinson Group?

 I joined Collinson Group after spending eight years at Bupa, including a period as CFO of Health Dialog, a Boston-based care Management Company. It was an exciting opportunity to join a more dynamic and entrepreneurial organisation.

My initial goal was to nurture the business and help to integrate a diverse range of companies, products and services. This involved building a layer of governance that would introduce a more structured approach to operations, without hindering the entrepreneurial culture of Collinson Group. The success of this approach to date, has been evidenced by the Group’s continued growth.

What achievements have you made in your role thus far and how have they contributed to Collinson Group’s performance in 2016?

 There are many brands within Collinson Group, and all of these are now growing in terms of their revenue, offering and capabilities; it has been incredibly satisfying to be able to help drive this growth. We have worked hard to ensure that we offer our clients a broad service offering, consolidating capabilities in a combined and integrated manner. I have also overseen several key acquisitions for the business, which are starting to gain traction in the market and expand our expertise.

My role as CFO differs to my peers in other organisations as HR directly reports into me. This is really working for us, as I am able to advise on how we invest in our people. It’s cliché, but our people are the key to our success, and they are the strongest asset that we have. The development and nurturing of our employees is paramount to the success of the business, and I find it personally rewarding to be part of people’s personal development as well as the growth of our business.

 What do you think are the main challenges for your company in the year ahead?

 In retail banking, regulatory pressures remain a significant factor, but are now accompanied by the increasing threat of emerging competitors fuelled by technology investment. The FinTech space is particularly buoyant in the payments arena, where the likes of Google, Samsung, Alibaba and Tencent threaten to disrupt the core relationships between consumers and traditional banks. In the EU, competition will be catalysed by the arrival of the Payments Directive II, enabling a new wave of intermediaries to repackage consumers’ bank account data. These developments are galvanising banks’ efforts to invest in their consumer relationships and improve their ability to extract value from customers.

These pressures are accentuated by a protracted period of low interest rates in many mature markets and ongoing regulatory moves addressing interchange fees. The latter is particularly relevant to loyalty programmes, both those of banks themselves and those of travel programmes for which over 70% of miles can be earned on payment cards. Collinson Group is well positioned to support customers in identifying and operating more effective loyalty programmes than traditional business models, and drawing upon our cultural heritage in innovation to solve our clients’ challenges today.

The tumultuous political and economic environment created this year also presents a unique set of challenges both in Europe with Brexit and the change in President in the United States. However, our global footprint continues to be a fundamental asset to the business, providing economic stability, exposure to capitalise on growth opportunities and unique access to insight from leading markets. It’s going to be an unpredictable few years ahead, but our diversification will enable us to meet the challenges head on from a position of strength.

By Paul Davies, head of business diversification, Audatex UK

You don’t have to look very far to see that autonomous vehicles are driving the technology news agenda. Pardon the pun, but it’s true. From Tesla to Google, Apple to Uber – there’s been an explosion of interest in the automotive industry, with big players from different sectors trying to muscle in on the act. Last year, there were 1.5 million cars sold in the UK already equipped with the necessary technology to be autonomous. Research suggests that by 2025, 25 per cent of the UK’s cars will be autonomous, a number that will increase to 50 per cent by 2040.

Furthermore, a little known fact is that the UK is one of the few European countries that decided not to sign the Vienna Convention on Road Traffic in 1968, which states drivers must be in control of their cars at all times. This convenient gap in regulations has left the door wide open for the UK to lead the way when it comes to autonomous test drives, which are already taking place all over the country. There is no doubt about it: Driverless cars are going to shape the world’s automotive landscape over the next few years, something that will undoubtedly have a massive impact on the insurance industry.

At a recent insurance industry event we hosted, one of the speakers - Paolo Cuomo of Charles Taylor/InsTechLondon - described the moment his 10-year-old daughter explained that neither she, nor her little brother need to learn how to drive. Her reasoning was that driverless cars will soon be able to take them everywhere they need to go - like a driverless (and thus relatively cheap) taxi service. I remember starting lessons as a teen, feeling overwhelmed by the sense of power and responsibility I felt sat behind the wheel. Getting my license required hours of revision and practice, to make sure I possessed the reaction skills, awareness and attention to detail needed to safely navigate a car on the road.

As driverless cars become the norm, younger generations may develop this perception that autonomous vehicles are safe. If that is the case, people may shy away from learning to drive all together – instead relying on technological developments in driverless vehicles, and opening up the idea that cars will soon become ‘chauffeurs’. Given that autonomous vehicles are still far from fail safe when it comes to accident avoidance, the industry does have a bit of time to work out how best to address that changing environment.

What will car insurance in the future look like?

As an insurer, what would you do if someone came to you and asked for an insurance policy when they have a fully autonomous car, have a licence, but have never owned a manual operated car before? How do you calculate what their premiums should be? They might assume that having a driverless car would automatically reduce their premiums to a minimum, but how would that change if they had previously owned a manual car before? Research shows that young drivers (16-19 years old) are a third more likely to die in a crash than 40-49 year olds. Because of this additional risk factor, young drivers find their excitement at passing and getting their first car comes screeching to a halt when they see how much insurance will cost them. Do industry statistics like that count, or individuals driving experience count when it comes to insurance premiums and their choice of car in the future? These are the kinds of questions we need to answer as an industry.

If driverless cars take off, we should also be asking ourselves what exactly we are insuring. In the event of a crash, it’s difficult to pinpoint where fault lies - whether it’s the car manufacturer, the software provider, or the passenger?

This question of ‘Who?’ will actually need to be opened up to a much broader field – one that goes beyond purely the automotive insurance industry. With the Internet of Things (IoT) getting bigger and more diverse, it’s only a matter of time before we see a blending of the home environment and the car. Just like how life insurance premiums differ depending on your lifestyle, I can already see the day where insurers will move from insuring possessions to insuring people and the ‘things’ they interact with. And all insurance they take out - whether home, phone, travel, pet or car - will depend on the person and their lifestyle.

This is great news for the consumer, as it flips the current system on its head. No longer will they need to look on countless comparison sites to find the best deal, but rather insurers may end up competing for their business. For example, if they exercise three times a week, drive safely, leave all their valuables indoors with a premium smart security system and only spend holidays in Iceland (the safest country in the world), then they are a safe bet for insurers and at the top of their wish-list. If customers can provide the data proving they have a ‘virtuous’ lifestyle, then this power shift will be an interesting one to watch unfold.

As discussions around driverless cars become more frequent among insurers, these are just a few of the topics that will be at the forefront of their minds. From assessing legal implications, to thinking about the apportioning of blame - the questions are endless. It is up to the insurance industry as a whole to come together, ask these questions, discuss them at length and come to ethical, logical conclusions. It’s not just up to us - consumers will no doubt have a loud voice when it comes to how they interact – and we all need to make sure we listen.

The recent release by the International Association of Insurance Supervisors (IAIS) of its consultation paper on a risk-based global insurance capital standard (ICS) is the latest instalment in a multi-year programme towards developing a global standard.

However, while this is one step closer to having a clear standard that global insurers can adopt, further regulatory reform may be required to ensure that it is consistent, experts claim.

ICS will apply on a group-wide, consolidated basis to around 50 of the largest international insurance groups (IAIGs) from 2018, with confidential reporting to supervisors starting in 2017. Key areas covered by the consultation paper relate to valuation, qualifying capital resources and potential approaches for determining capital requirements.

However, KPMG warns there is still much to do, pointing out that minimum standards could leave potential for regulatory arbitrage

“We have long supported the IAIS endeavours to develop a global capital standard. However, the practical application by supervisors will be equally as important as the requirements themselves. In this regard, the interplay between the ICS and local regulatory requirements will be critical,” said Gary Reader, Global Head of Insurance, KPMG International.

“In addition, as the ICS will not apply at a legal entity level, groups will face additional challenges in managing both solo and group requirements. The minimum standard nature of the proposals will mean that local jurisdiction supervisors must demonstrate that their own regime is at least as strong as the ICS, or groups headquartered there will face an additional layer of reporting requirements, with confusion as to which becomes their binding requirement.”

Global insurers need to take note of the changes and respond to the consultation. The deadline for finalization of the ICS is December 2016.