UK’s ABI Highlights 7 Challenges Facing the Insurance Industry

The Association of British Insurers has released a report at its biannual conference In London, entitled “Identifying the Challenges of a Changing World.” It features an “analysis of the challenges facing the UK insurance industry and society, and launches a debate on how insurers can play a key role in finding solutions to the issues that will shape our world in the 2020s and beyond,” the ABI said.

Consumer research, also published by the ABI underlines public concerns on some of the key challenges in the report. It identifies seven over-arching trends most relevant to insurers as follows:
•The digital revolution and impact of the social media
•Global convergence, with an increasingly inter-connected and balanced global economy
•The development and recovery of Western economies after the financial crisis
•Global ageing
•Political challenges, with a more proactive and visible industry approach to public policy than previously
•Interventionist regulation
•The continued impact of climate change

The report examines the extent to which the insurance industry can “play a greater role” in meeting the challenges of a changing world. This theme will be debated at the ABI’s Biennial Conference by speakers, including: “The Rt. Hon Oliver Letwin MP, Minister for Government Policy; The Right Hon Ed Balls MP; Shadow Chancellor; key UK and EU regulators, and industry leaders, including Tidjane Thiam, ABI Chairman and Group Chief Executive, Prudential. They will be joined by representatives from over 350 financial service companies.”

Otto Thoresen, ABI Director General, said: “This report is ABI ‘thinking out loud’ about what impact national and global trends have on our customers, the economy and the industry. Our report marks the start of a debate in the industry and with other stakeholders about what action is needed to cope with, and take advantage of, the huge changes we all face.”

“The rules of day-to-day life are being rewritten, and insurance has a key role to play in tackling many of the issues that matter for society. Insurance provides cover against risks inherent in all aspects of life – from safeguarding our homes, and businesses, protecting against illness and death, to providing income in retirement.

“Our recently agreed Flood Re deal with the Government is an example of how insurers, working with government, can develop solutions to the challenges we face. In other areas, such as pensions, we need a new ‘social contract’ with government to reflect the shifting boundaries between state and private provision”.

The ABI also explained that it is “using the report as a springboard to launch its ‘Big Debate’ within the industry and among other stakeholders on how to deliver better solutions for customers. Debate will likely focus on regulation, stimulating economic growth and infrastructure investment, welfare reform, paying for life after work, and the acceptable use and security of personal data now available.”

ABI-commissioned research has identified people’s views on these challenges and highlights the need to tackle these issues. The report listed the following findings:
•On welfare, the majority of people think the Government should have primary responsibility for paying living costs if someone loses their job (52 percent), becomes ill and is unable to work for longer than a month (65 percent) or suffers serious injury and is unable to work again (80 percent).

•Many families remain financially unprepared for the future. Over half (51 percent) feel that they or their family would struggle if they were seriously injured, diagnosed with serious illness or if the main breadwinner dies. Yet more than half (57 percent) do not have life, critical illness or income protection insurance. Two-thirds (66 percent) of people admit they would struggle to pay for long-term care costs, while 50 percent were unaware of any current state help for possible long term care costs in old age.

•Retirement is seen as non-existent for some. One in five (20 percent) non-retired people think they will never retire; of those who do think they will retire, just over four in ten (41 percent) felt that they will continue to work at least part time.

•On data protection, nearly three-quarters of people surveyed online (72 percent) say that adequate protection of personal data is important or extremely important. Six in ten people (60 percent) currently participating in social media would be unhappy about their personal information which they provide through social media being used by companies to personalize services to them

For more information, go to: www.abi.org.uk/jointhedebate

Source: Association of British Insurers (ABI)

Topics Market