Sarah Goddard, the CEO of the Dublin Insurance Marketing Association (DIMA), organizers of the European Insurance Forum, took time to discuss some of the issues the re/insurance industry faces, now that it has more or less coped with the Solvency II regulations.
This year’s EIF conference, held at the historic Croke Park in Dublin, the home of Gaelic games, was somewhat of a departure as conferences go. It included a number of speakers and panel members from outside the industry who addressed “big picture” issues rather than more specific concerns.
Europe’s insurers are finally moving on from Solvency II, which Goddard said was “like the poor – always with us.” Regulation, however, is important, and while there were conference presentations on Solvency II, the EIF also covered the potential for a global regulatory system. “There’s been a lot of almost stasis in the industry,” Goddard said, “an infrastructural stasis, as people have been getting to grips with new regulatory systems in Europe, but a lot of that work is now over and done with.”
They now have an opportunity to “look at what the biggest challenges are” and to take a look at “how the world is changing” and how a “new client base is developing,” she said. This includes “how the new delivery systems might take place, how people are interacting with the world around them. What are the new models? What are the new risks?”
Goddard chose, however, to address an old one risk. Just as “regulation doesn’t tend to have too much of a glamorous side to it,” she said, “the sad thing is that insurance doesn’t have so much of a glamorous side to it either. The vast majority of people, myself included, never meant to go into insurance. It wasn’t something that was a career choice.”
She said she has met only two people in her life who decided to go into insurance.
“Everybody else has fallen into it [insurance], but it’s kind of a Hotel California if you get it. Because what we do, in particular from the international, global, program perspective, actually underpins practically all human economic activities. It’s astonishing. To actually be part of that can really be a privilege at times.”
Attracting new and competent talent may well be vital for the industry’s future, as it’s been projected that something like half of the people who are now working in insurance will retire within the next 10 years.
How does the industry attract motivated people who maybe didn’t intend to go into insurance, but would be good candidates if they knew about it?
It’s “an interesting quandary,” Goddard said. “Particularly in Ireland, we’ve got an absolutely thriving technology sector here. We’ve got a Google headquarters, which is huge, and keeps on getting bigger. Facebook has their European headquarters here, LinkedIn, Twitter” as well, “and they’re all sucking up these young people who are very motivated, very creative.”
It isn’t an impossible task, however, to attract such people. While Facebook and similar tech enterprises may be “sexy and glam to a certain group of people,” there are others who are looking for something different.
“We had students join us for the second day of the conference this year from the University of Limerick where they do Bachelors, Masters and Doctorates in insurance and risk management,” she continued. “There were also students from several universities around this country and from Northern Ireland who are actuarial students.” In their case Goddard pointed out that even to get into the school – at the undergraduate level – “they have to get perfect scores on their leaving examinations from secondary school [high school] in order to get the basic entrance criteria there.”
There are other people who want something else rather than “the Googles of this world,” and Ireland is a good place to find them, as “it’s got a big research and development center.” Marsh, Mediolanum and Citi group for example all have R&D branches in Ireland. It already has “hundreds of people who are harnessing what a lot of people are calling ‘big data.'” They’ve also realized, she said, that “big data has always been what insurance has been about. It’s just got a label now that everybody’s thinking about.”
So far the people who are attracted to the re/insurance industry mainly work on the “analytic side of things. If you say that it is this AI research and development center, which is what these guys are doing, and the disciplines that come in with that, that possibly makes a little bit more interesting than saying insurance broker.” As an example she cited RenaissanceRe, which employs geographers, modelers, climatologists in “all sorts of disciplines.”
Some of those people who are now working in insurance might have formerly gone into banking, but Goddard pointed out that “the banking crisis probably didn’t do us any harm. We did quite well because banking, which had traditionally been very attractive to a lot of the top graduates lost it’s luster, and some we’ve seen looking to insurance as something different.”
Recruiting has gotten more sophisticated as well, because the people who do it realize that they need to explain that insurance doesn’t consist mainly of “selling a motor [automobile] policy, or the grudge purchase of the man on the street who has to have some sort of policy, which will support his mortgage. There’s so much more, hopefully, that people will see that this is actually an interesting and growing alternative as a career choice.”
Ireland’s drive to attract companies continues. “There’s been some growth within the companies that are within the membership [of DIMA] fairly recently,” Goddard said. “A lot of that is to do with restructuring” in order to meet the “increased corporate governance requirements, which are coming around over the past few years, so we’ve got some really good people here now who are really, really excellent on the corporate governance side of life. It’s a real compliance hub.
“So, we’re seeing growth, and there’s still a lot more activity on that side that’s just coming through at the moment. There’s some ILS [insurance linked securities] activity which has been taking place over the last few years. They would probably see more activity in the next year because of the change in the regulatory environment, but it’s really good.”
Ireland is well on the road to recovery from the financial crisis, which hit the country very hard. It’s “coming back into that sort of environment where we’re post-recession, we’re seeing economic growth,” Goddard said. “There’s a palpable change in just the general environment of Dublin. Despite the fact that it’s raining today, maybe that’s not palpably changing.”
Asked what the possible consequences might be for Ireland if the UK votes to exit the European Union, Goddard said such a decision would be “profound” in all directions, pointing out that the Republic of Ireland is the only country in the EU which has a land border with the UK, that is with Northern Ireland. The “troubles” there, however, have largely calmed down, and except for a few signs, the border isn’t very visible.
“That, of course, would have to change,” she said. “So you get to a certain situation where on the island of Ireland, there are two countries which haven’t got the affinity that they used to have.” This raises the question of London’s continued position as the major global financial center, along with New York.
“But,” Goddard said, “you always need a regional center. I don’t think Dublin would aspire to be the only regional center, and in fact it’s been very successful in being an area which is very wide spread, it’s both looking at the GSCI indexes, and recently Dublin has gone back up. We’ve had a big slump during the economic recession here, but we’re finding a way back up quite quickly at the moment, in the global centers index.”
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