REMARKS BY PRESIDENT McALEESE TO THE EUROPEAN INSURANCE FORUM RDS CONCERT HALL
REMARKS BY PRESIDENT McALEESE TO THE EUROPEAN INSURANCE FORUM RDS CONCERT HALL TUESDAY, 30 MARCH 2010
Good morning and thank you for the warm welcome and the invitation from Chairman of DIMA, Tim Hennessey and the Chief Executive, Sarah Goddard to address this conference. If you are preparing a speech for a conference of doctors, lawyers, teachers, even accountants or quantity surveyors, you can with the help of Google, access thousands of humorous quotations. However, put the words insurance and quotations together and up will come 14 million Irish references alone to car or home or business insurance.
Given the dreadful flooding we experienced in the autumn, maybe it is appropriate that insurance is not a subject of superficial humour. The people I talked to during and after those floods experienced a level of hardship, suffering and loss that an insurance cheque could never hope to fully assuage. But there is no doubt that to be insured in those unprecedented situations mattered, to have claims dealt with expeditiously mattered, to have them dealt with fairly and sensitively mattered. Last year in the wake of the damage from flooding, which continues to affect so many families, businesses and farms, I appealed to the insurance companies to deal with their claims as quickly and compassionately as possible; I thank them for their efforts in helping people get their lives, livelihoods, homes, farms and businesses back together as quickly as possible.
Everyone of those affected would have preferred never to have had to fill out a claims form but in having insurance in the first place they were trying to take some control of the forces that make life capricious and unpredictable. When we travel safely to and from work by car, car insurance gives us a platform of confidence and reassurance. We hope nothing untoward will happen but if it does we know that at the very least there will be some monetary safety net to help cope with adverse consequences of accidents. So we insure our lives, cars, homes, our businesses and our organisations against the thefts, the storm damage, the accidents, the illnesses, the deaths and the imponderables that life tells us are within the realm of possibility and that insurance provides both a psychological and practical comfort blanket for, as well of course as fulfilling legal obligations in some cases.
Yours is the industry that provides that all-important comfort blanket. It is important to individual policy holders and it is vital to the everyday freeflow of civic life and commerce. Just as the world’s economies need functioning banking systems, so we also need functioning insurance systems. The vicious cycle of irresponsible risk-taking in the world of banking and entrepreneurship, underpinned as it has been by a breakdown not simply in economics but in ethics, has had devastating economic and psychological consequences locally and globally. People are rightly indignant at how vulnerable they have been made by individuals and institutions that showed a phenomenal lack of sensitivity to the broad based social impact of their follies. Now people are spending averse and lacking in trust in the judgment of others whose credibility they once regarded highly. These are perfectly understandable responses yet along with wiser judgment, higher ethics, stronger controls and much more intuitive economic weathervanes we need to be careful that an overly cautious approach does not strangle the sustainable and sensible economic development, we need to get back on the path to growth and jobs. To counter the uncertainty we need zones of stability and reassurance and your industry is one such.
Your sector and the stability it offers to us, whether as motorists or home owners, farmers, SMEs or multinational organisations plays a vital role in allaying some of the righteous fears and insecurities which recent events have heightened. You supply some of the ballast that allows us to manage risk confidently and intelligently so that everyday life and commerce can function effectively, so that we can plan again and act again - so that we can generate momentum again.
In Ireland, the international insurance and reinsurance sector has been operating successfully. Ireland continues to consolidate its position as one of the more sought after reinsurance locations but, despite this success, neither complacency nor self-congratulation is any guarantee in the teeth of stiff international competition. Our job now is to retain Ireland’s reputation as an attractive place for such companies to operate - in particular through a robust and credible regulatory regime, a regime that is proportionate and appropriate, balancing the imperatives of effective, thoughtful protection for clients and consumers and the broader economy, with an operational framework conducive to doing business.
A gathering like today’s emphasises the international dimension of the insurance and reinsurance industry and its diversity of operations. The nature and composition of the industry goes well beyond the standard consumer insurance products familiar to most households. The complexity is reflected in some of the more specialist lines of business found in Dublin such as captive insurers and reinsurers. The captive industry in particular has played a very significant role in growing the international side of the Irish financial services sector and is an indispensable tool for large non-financial services groups in managing their overall insurance costs. In this area, the innovation and expertise associated with Irish industry has been a key strength in building our reputation as a good place to do business. We have particularly benefitted from our global Irish family and the industry in Ireland is characterised by members of our diaspora who have gained valuable international experience before returning to senior positions here.
The importance of the reinsurance industry particularly in the current uncertain times cannot be underestimated. Its ability to introduce a greater level of stability into the insurance market at times of turbulent events means that insurance companies are in a better position to respond to the pressures that such events place on their reserves. In the same way as the insurance industry offers the micro market of homeowners, farmers, motorists and business people a safety net, the reinsurance industry aims to stabilise the wider macro market and smooth out the risks that the sector faces. Without this shared exposure, insurance companies simply would not be able to underwrite many of the current risks on their books and many businesses and households around the country would be in a particularly vulnerable position.
The certainty and confidence that insurance provision brings to all our daily lives, whether business or personal, enables us to breathe more easily, to find the confidence to let innovation flourish and to engage with the present and the future, chastened by the past but not allowing the fear of the possible to paralyse us in the present.
The entire insurance sector across Europe is facing a thorough overhaul in the near future with the introduction of the EU’s Solvency II Directive. Such a widespread reform of how we measure and deal with risk and how you conduct your business each day will force you to interrogate your work and services, your values and your judgments much more probingly. You will be expected to look much more closely at the level of risk you carry on your books and allocate the appropriate level of capital to meet them. Such a thoroughgoing renovation of your operating environment will be quite a challenge but the prize for doing the job with foresight, diligence and vision is a culture of embedded best practices and the assurance of striving for best outcomes even in the worst of circumstances.
Your industry helps us to keep the worst of nature and human nature at bay. It does not and should not encourage either crass foolhardiness or paralysing risk aversion. Like the reins we put on our toddler children, your industry should help us to walk not hold us back, should soften our landing if we fall and help us to get back up and try again. I wish you well for your future and the future of this industry for we as a society pick ourselves up your industry has a vital role to play in the faith and confidence with which we face the future and face down its unknowns and its vagaries. Not only are you hard-working captive insurers, but you have also been a gracious captive audience and I appreciate your kind attention. I hope the international insurance and reinsurance industry continues to flourish in Ireland and I wish you all the best in adapting to the newly-reformed operating environment that will come into play soon.
Go raibh míle maith agaibh go léir.