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					The Professional Insurance Broker
The official magazine of the Professional Insurance Brokers Association

                                                            Issue 25 • Summer 2009
PIBA Committee
Elected May 2009

                                                                           Jarlath Jordan, Vice President,
   Michael Hoare, Chairman,                                                Galway City, Co. Galway.
   Ratoath, Co. Meath.                                                     Jarlath Jordan is Principal Partner with Mill
   Michael Hoare, QFA, is currently MD of Helvetia                         Financial Services based in Galway City. Jarlath is
   Wealth in Ireland. Michael holds a Masters                              married to Fionnuala and has three teenage children. He has a
   Degree in Business Administration. He is a five time Court of the       keen interest in GAA, soccer and sports in general. Jarlath believes
   Table member of the Million Dollar Round Table. Michael was a           that while the current economic environment is very challenging
   Republic of Ireland soccer international from the age of 15 to 20.      there are opportunities for independent financial advisors to
   He also played League of Ireland soccer for Shamrock Rovers,            become a stronger force within the industry in the future.
   Drogheda United and Home Farm.                                          Jarlath joined the PIBA Committee in 2006.
   Michael was appointed to the PIBA committee in 2006.                    He was elected as Vice Chairman of PIBA in May 2009.
   He previously held the position of Vice-Chairman and was
   appointed as PIBA Chairman in May 2009.
   Michael is also a Director of PIBA Network Services.


                                                                           Michael Leyden, Treasurer,
                                                                           Ennis, Co. Clare.
                                                                           Michael Leyden is currently Group Chairman of
    Anne Hession                                                           Leyden Property & Financial Services, with offices
    Oranmore, Co. Galway.                                                  in Ennis and Lahinch. Michael is a keen sports enthusiast and a
                                                                           dedicated follower of the Clare hurling team. Other interests
    Anne Hession, QFA, set up her own Brokerage,
                                                                           include traditional Irish music; setdancing; public speaking (he has
    Hession Life & Pensions Ltd, in 1997. She
                                                                           the distinction of holding the offices of President of Ennis
    provides services through Irish, having completed a Diploma in
                                                                           Toastmasters and Area Governor of Toastmasters simultaneously);
    Irish last year. She is a founding member and director of Galway
                                                                           and foreign travel.
    Executive Skillnets. She is also a member of Network, The
    Organisation of Women in Business, the Professions and the Arts.       He is a Director and Treasurer of PIBA.
    She is a recent past president of the Galway Branch and is             He is also a Director of PIBA Network Services.
    currently the Branch Expansion Officer on the National Executive.
    Her favourite pastime is hill walking and she has four grown up
    children.
    Anne re-joined the PIBA Executive in 2008 as Chairperson of the
    Legislation Sub-committee, having previously been on the
    committee for four years.                                              Tom O Keeffe, Secretary,
                                                                           Naas, Co. Kildare.
                                                                           Tom O'Keeffe is MD of Naas Insurance and
                                                                           Mortgage Brokers, which was established in 1946.
                                                                           He is a past Secretary and Vice-President of Naas Chamber of
                                                                           Commerce. He resides with his wife Adrienne in Ballymore
   Paul Cullen                                                             Eustace in Co. Kildare and is active in local environmental issues.
   Stepaside, Dublin 18.
                                                                           Tom became a member of the PIBA Committee in 2006. He was
   Paul Cullen, QFA, is currently the Managing                             appointed to the position of PIBA Secretary in 2008 and again in
   Director of Life Goals Financial Services Ltd. Paul                     2009.
   is an eight year member of the MDRT (Million Dollar Round
   Table), with five Court of the Table and two Top of the Table
   awards. Paul's interests include music, and as a teenager he was a
   member of the Rathfarnham Concert Band. He was accepted into
   the Irish Youth Wind Ensemble as lead saxophonist two years
   running. Paul is a keen sports fan and currently Life Goals Financial
   Services sponsor the Ballyboden St Enda's Senior B Hurling Team.
                                                                           Maurice Harnett
   He is an avid skier. Paul is married to Nathalie and has two            Glasnevin, Dublin 9.
   daughters, Laura and Emilie.                                            Maurice together with Derek Fitzgerald formed a
   Paul was appointed to the PIBA Committee in 2009.                       new Brokerage (Fitzgerald and Harnett) in 1987.
   He is also chairman of the Life sub-committee.                          Maurice is originally from Glasnevin. He enjoys golf and is a
                                                                           member of Skerries Golf club.
                                                                           Maurice joined the PIBA committee in May 2008. He is currently
                                                                           chairman of the General Insurance sub-committee.


   Liam Carberry
   Sutton, Co. Dublin
   In 2000, Liam established Liam Carberry Financial                       Jimmy Cumiskey
   Planning in Sutton, Co. Dublin. Liam sat on the
   Financial Services Consultative Industry Panel from 2004 to 2008        Dundalk, Co. Louth.
   and currently sits on the board of the PSAB-GI. Liam is a member        Jimmy Cumiskey set up European Mortgages Call
   of the Irish National Taekwondo Association (ITF) and holds black       Centre in 1998. Jimmy holds a Masters Degree in
   belt status. He is also coach to the Irish national team, who won       Business Administration and a Degree and Diploma in Business
   13 medals in the European Championships which took place in             Studies. He is also a member of the Marketing Institute. He is a
   May 2009 in Spain.                                                      former president of the National Youth Federation and a non-donor
   Liam Carberry was actively involved as a Director of the PIBA           trustee of the Irish Youth Federation.
   committee between 2002 and 2008, holding the positions of               Jimmy was appointed to the PIBA Committee in May 2008. Jimmy
   Chairman and Vice-Chairman. Liam was re-elected to the                  is also Chairman of the PIBA Mortgage Sub-committee.
   committee at the AGM in May 2009.                                       Jimmy is also a Director of PIBA Network Services.
Chairman’s Remarks

By Michael Hoare

Welcome to the summer edition of The Professional Insurance              wondering where it all went wrong. Instead we must mobilise our
Broker.    As this is my first contribution to the magazine as           resources and apply our considerable skills to the task of realigning
Chairman, I will take the opportunity to share my initial thoughts on    our clients' financial affairs to reflect their new reality. It appears to
the business environment that we must operate in at present and          me that there has never been a greater opportunity to re-invent
the role that I believe PIBA will play in representing our               ourselves by moving up the value chain by providing advice and
membership to optimum effect.                                            guidance in areas where you, and only you, can add real value. In
                                                                         less austere times, which will shortly become known as the good
Recently I was dispatched to the Conrad Hotel to take my place
                                                                         old days, the issue of financial protection met with significant
with the great and the good of the Irish financial services sector at
                                                                         resistance from clients who were busy growing their businesses
the annual luncheon of the Irish Insurance Federation. As a rookie
                                                                         and accumulating wealth. Specialist areas such as succession
at such events and with my 'L' plates firmly affixed front and back, I
                                                                         planning, business insurance and shareholder protection are fruits
adopted the unfamiliar role of listening more than I spoke! I was
                                                                         ripe for picking in this environment, as what is scarce has become
quite struck by the uniformity of concerns among the attendees, all
                                                                         valuable. Perhaps we will look back at this period in the not too
fine people trying to make sense of a mess for their respective
                                                                         distant future and recognise that it was a necessary process to
organisations and members. The downturn, the credit crunch, the
                                                                         shake our industry out of the comfortable complacency that had
property crisis, the banks, the bankers....need I go on? I think you
                                                                         us believing our own publicity!
know the air to that particular tune. We are moving into a new
age, where the familiar templates are broken. This is a real             As an active, energetic representative body, PIBA will endeavour to
challenge for those of us who were only getting used to the              create an appropriate environment so that you can grow your
previous ones but, like it or not, change is the only constant in our    practices profitably. We do not underestimate the challenges of
new reality. I came away from the IIF lunch convinced that there         dealing with the various stakeholders who have diverse agendas,
are many who will earn their crust over the next number of years         but we shall continue to pursue a well established policy of
looking back on the mistakes of various groups; and undoubtedly          developing working partnerships that will ensure the success of our
they will produce the necessary recommendations to reduce the            members. We cannot fight every battle so we will choose those
possibility of these mistakes recurring. This is right, and indeed       that we engage in carefully. It may be helpful to remember,
good business practice. As a critical mass of Brokers who serve          though, that war does not determine who is right, only who is left.
clients professionally the length and breadth of this island, we do      I look forward to serving as your Chairman.
not have the luxury of being able to gaze in the rear view mirror




Contents
   Rebound                                                                                                                                   5
   Friends First Insight Currency Fund - No.1 Fund in Ireland                                                                                7
   Oversupply and falling demand put downward pressure on rents                                                                              8
   A Level Playing Field                                                                                                                     9
   PIBA/Zurich Life Broker Sentiment Survey                                                                                                 10
   Leading With Humility                                                                                                                    12
   Never Sell to a Stranger                                                                                                                 13
   Why to charge fees, and how                                                                                                              14
   Time to get 'preoccupied' with unoccupied property!                                                                                      15
   PIBA Annual Broker Conference 2009                                                                                                       16
   Pension Positives                                                                                                                        18
   Buying in France?                                                                                                                        20
   Understanding Income Protection claims can really support your protection advice                                                         21
   How match fit is your business?                                                                                                          22
   Now more than ever, clients must plan ahead for their Financial Future                                                                   24
   Aviva Irl BlackRock European Absolute Return Strategies Fund                                                                             26
   The Possibilities of Outsourcing Certain Functions of Your Business                                                                      28
   PIBA Activities                                                                                                                          30
   First-Class Protection from Friends First                                                                                                31
   Updates                                                                                                                                  32
   Crossword                                                                                                                                32
                                  Editorial

                                  By Emer O’Flanagan

                                  The Governor of the Central Bank, John Hurley, has warned that economic recovery will take time but will start to be seen
                                  next year. He does, however, admit that 2009 will be very difficult and that the decline in house prices is likely to continue.
                                  John Hurley is still using words like ”adjustment” in the context of the housing sector, which is quite staggering. He also
                                  neglects to comment on the obvious fact that banks are just not lending money! The commercial wheels are no longer
                                  turning and the reality is that the banks do not have the money to lend in any event. The cynics may believe that this may
                                  be in some way connected to the staggering remuneration packages former chief executives manage to secure? In one
                                  case a figure of E3 million was recorded in the bank's Annual Report.

                                  Mr Hurley's comments come as a result of the recent ECB decision to leave interest rates unchanged at 1% but to sharply
                                  downgrade its growth forecast for the euro zone. The ECB predicts that the euro zone economy will contract in terms of
                                  real gross domestic product (GDP) by between minus 5.1 per cent and minus 4.1 per cent this year, and by between
                                  minus 1 per cent and 0.4 per cent in 2010. The Nobel Prize-winning economist Paul Krugman, who ruffled a few feathers
                                  recently with his 'Erin Go Broke' column in the New York Times, said that the global economy is "stabilising but not
                                  recovering".

                                  As a consequence of comments from Jean - Claude Trichet the ECB President, some borrowers may be advised to give
                                  consideration to locking in to a fixed rate mortgage - this needs to be explored with caution. Mr Trichet's comments are
                                  being interpreted as signalling an end to the current cycle of rate cuts. In addition, economist Austin Hughes of KBC Bank
                                  said that it was now likely that euro zone rates would not go below their current level of 1 per cent, even if the first hike in
                                  interest rates seems far away. However ECB policy makers are discussing a rate hike in December. We must be wary of
                                  short term optimism and think long and hard about matters financial as it would appear that the holders of high offices
                                  within the ECB are not clear about when and how this recovery will come about.

                                  However, comments from ECB president Jean - Claude Trichet would seem to indicate that central bankers believe the
                                  worst is over for European economies, but that the turnaround will be slow. The economic situation in Ireland is very
                                  different to that of our European brothers and sisters, which makes it difficult to buy in to this cautious new-found
                                  optimism, much and all as we would like to.




                                  Committee Members                                                                    Sub-Committee Chairpersons
                                  Michael Hoare                         Chairman                                       Life                                    Paul Cullen
                                  Jarlath Jordan                        Vice-Chairman                                  General                                 Maurice Harnett
                                  Tom O’Keeffe                          Secretary                                      Mortgage                                Jimmy Cumiskey
                                  Michael Leyden                        Treasurer                                      Legislation                             Anne Hession
                                  Anne Hession
                                  Jimmy Cumiskey
                                  Maurice Harnett
                                  Paul Cullen
                                  Liam Carberry                                                                        Chief Executive: Diarmuid Kelly



The Professional Insurance Broker
14B Cashel Business Centre, Cashel Road, Crumlin, Dublin 12 • Tel: (01) 492 2202 • Fax: (01) 499 1569 • e-mail: info@piba.ie • Website: www.piba.ie
Chief Executive: Diarmuid Kelly
Editorial Group: Fiona O'Connor, Edel Morey. Editor: Emer O’Flanagan
Publisher: Salient Print Management, Naas, Co. Kildare. Tel: (045) 866057 & (087) 254 3463. Design: Salient Print Management, Naas, Co. Kildare. Tel: (045) 866057 & (087) 254 34637
Views expressed by contributors or correspondents are not necessarily those of PIBA or the publisher and neither PIBA nor the publisher accepts any responsibilty for them.



                                                                     The Professional Insurance Broker                                                                                 3
            Rebound
              Recognition of the Modern Mortgage Broker
            By Diarmuid Kelly, Chief Executive, PIBA




Macroeconomic instability is all about relative not absolute          assets to cash (e-cash) on the assumption that the banks will
prices, as it is relative prices that direct the allocation of        seek to lend the traditional multiple of core cash. This may of
resources in an economy. Globally the monetary boom of the            course be blocked by lack of demand from consumers to
last twelve years has caused an asset price inflation but retail      borrow, lack of capital by banks or lack of willingness by banks
price inflation has been held in check by competitive forces,         to lend because of perceived macro-economic risk. Money
most notably the increase in Chinese foreign trade. Margins           only becomes 'live' when borrowed and spent as this
were squeezed by higher wages whilst wage earners were                generates income and the multiplier effect in the economy.
robbed of the increased nominal sums by higher house prices
and service sector / public sector costs.                             The other way to inject money into the economy is via
                                                                      government borrowing, and this is certainly happening in
“We pretend to work and they pretend to pay us” were words            spades. A third way (helicopter money) is to give money away
used to describe the old Soviet economy. There were no                to reboot the economy, but this is just a variation of
goods in the shops to back the roubles the workers were paid          government deficit finance (this would normally be done by
and in turn they lacked the enthusiasm to be productive. A            assistance to firms in trouble or in extreme cases cheques to
similar comment could be made relating to some (but not all)          social welfare recipients who have the highest propensity to
developments in the global economy. Technology and the                spend).
Internet have driven real gains over the last decade, but equally
froth emerged. Asset prices - particularly property - were driven     Even if Central Banks wanted to reverse recent monetary
up and as this unwound, debt that was secured against it              actions, will they be able to? Interest rates should probably
turned toxic. The public sector/central banks rushed in to            have already been lifted by now and how many quantitative
absorb the debt and prevent complete monetary collapse in             restrictions will they be able to apply in the context of large
the biggest episode of money printing seen in history.                government deficits over the next few years?

We as a society forgot that asset prices are simply a conversion      So momentum will build. Consumers and firms will become
of income streams, and banks and other financial institutions         increasingly confident that the world is not about to end, and
financed the inflation of these prices with little if any objective   will begin spending and investing again. And then markets will
justification other than if they didn't do the deal, somebody         worry about inflation, which will cause the velocity of money to
else would.                                                           increase (people will seek to dump money by spending on
                                                                      goods or real / inflation protected assets). At that point it will
But as the Central Banks and public sector have absorbed              not be good enough to withdraw excess cash: inflation will be
much of the debt, what next?                                          in the system.

Speculation on what we are heading towards has moved on               However, hyperinflation will not happen - the ECB and Fed will
since I last wrote from deflationary disaster to whether there        track the inflation rate upwards until it is ready to kill it with the
will be deflation, inflation or hyperinflation in the next 12 to 24   usual mini recession medicine. A moderate level of inflation
months.                                                               for two to three years may be consistent with the rebalance of
                                                                      asset prices with incomes, normalising debt-equity ratios and
The process of quantitative easing is normally done in liquidity      overall macro-economic and fiscal stability.
management operations. The CB sets the interest rate to cool
or prime the economy and gives the banks whatever liquidity
facilities are needed to maintain interbank rates around the
target interest level. Recently the Fed and ECB have moved to
targeting the expansion of this liquidity base by converting



                                       The Professional Insurance Broker                                                                       5
                Oversupply and falling demand
                put downward pressure on rents
                By Ronan Lyons, Economist, daft.ie




    When it comes to the Irish property market, the fate of the           demand. On the supply side, the number of properties
    sales side is well known, with prices at least 20% lower than         available for rent is now over 23,000 – an all time high,
    their peak in early 2007. The fate of the lettings market since       certainly compared with the 5,000-6,000 range that was the
    the start of the Irish and global slowdown has been more              typical volume of listing up to 2007. This means that there is
    complicated. Rents rose — and rose quickly — at first, with           much fiercer competition between landlords for tenants,
    inflation in rents in double digits as late as July 2007. Since the   pushing down rents. To this must be added falling demand, as
    start of 2008, however, rents have been falling and the latest        Ireland's most footloose workers – Ireland’s renters – are at
    Daft.ie Rental Report, released in mid-April, shows that rents        least in part heading off to pastures new or in some case
    across the country fell by more than 5% in the first three            returning home.
    months of the year.
                                                                          When rents rose so fast in 2007, this was the demand side of
    The national average rent now stands at €840 per month,               the property market moving faster than the supply side – the
    compared to just over €1,000 per month a year ago.                    typical household that was contemplating switching from
    Nationwide, rents have now fallen for 14 consecutive months.          renting to buying decided to hold on for a little while longer,
    The fall since the peak in early 2008 has been faster than the        meaning that there were more tenants than usual. The supply
    rise before that; and with rents 17.5% lower than the peak in         side of the property market has followed them over, with
    early 2008, rents are now back at mid-2005 levels.                    people unable to sell trying to find tenants as well as empty
                                                                          new homes being put on the lettings market.
    The largest falls in rents have been in the cities. In Dublin and
    Limerick, rents fell by up to 6.5% in the first three months of       For landlords, yields on property now are still low – the national
    the year. In Waterford and Cork cities, rents fell by 5.3% and        average is 3.4%, unchanged from a year ago. Yields vary by
    5.1% respectively. In Galway, the fall in rents was smaller, at       region and by property size though, with yields for one and two
    4.3%. Rents in Dublin's commuter counties and in West                 bedroom properties averaging 4%, while yields in Dublin city
    Leinster (i.e. Laois, Longford, Offaly and Westmeath) have            centre, south Dublin city (even postcodes) and west Dublin are
    fallen by about 6%, more than the national average.                   up to 4.4% on average.

    While rents have fallen in all regions of the country, some           The outlook looks set to stay rosy for tenants but bleak for
    places have been less affected. In South-East Leinster –              landlords. The sheer volume of properties available to let in all
    Carlow, Kilkenny and Wexford – and in the counties of                 parts of the country, coupled with the likely situation regarding
    Connacht and Ulster, rents have fallen by less, typically by          net migration over the coming 24 months or so mean that all
    about 3.5%. Rents in Leitrim and Roscommon fell by less than          the pressure on rents throughout 2009 and into 2010 will be
    1.5%. In most of Connacht and Ulster, though, rents had not           downward pressure. Rents are already one sixth lower than
    risen by much in the rental market upswing between 2004               their peak – given the lack of confidence in the Irish economy,
    and 2008, meaning that in many towns, rents are now at their          it would not be surprising if rents fell by one third before
    lowest levels since the introduction of the euro.                     bottoming out. The only good news for landlords is that if they
                                                                          are recent purchasers, they are benefiting from low interest
    The fall is even being seen in amounts charged for                    rates and if they are not, their purchase price will have been
    accommodation sharing or rent-a-room. Prices for a single or          that bit lower.
    double room are generally very static but they have fallen up to
    10% – or €50 – in the last quarter. A single room in Dublin
    city centre now commands a price of about €450 on average,
    while the average price for a double room is about €580. The
    equivalent prices in Cork are €300 and €380.

    The reason for the current fall in rents is clear – the rental
    market is feeling the brunt of too much supply and not enough




8                                           The Professional Insurance Broker
            A Level Playing Field
            The Head Barman, the Bouncer and the Bankers
            By Elizabeth Smith, Compliance Manager, PIBA

PIBA has been to the forefront in challenging unnecessary and        regulated financial service providers and persons concerned in
bureaucratic regulation by the Central Bank and the Financial        the management of regulated financial service providers. To
Regulator; and we continue to make this a major priority of the      date no bank, bank director or employee has been sanctioned
Association. PIBA actively lobbies for the reform of unnecessary     under it. However, a number of burdensome administrative
regulations which do nothing for the protection of the consumer      sanctions have been applied to Brokers for relatively minor
and are an unnecessary financial burden on Brokers. It is PIBA's     offences.
belief that a key principle of good regulation should be
proportionality - regulation appropriate to the level of potential
                                                                     IMD2
risk posed to consumers.
                                                                     The delay in implementing IMD 2 has meant that at present
Balanced and Proportionate Regulation                                many insurance intermediaries are subject to both the
                                                                     Investment Intermediaries Act 1995 and the Insurance
PIBA and its members support balanced and proportionate              Mediation Regulations. Once of the consequences of this dual
regulation as we believe that it is essential to protect             system of regulation is that intermediaries are still obligated to
consumers, to protect honest companies and to uphold the             submit audited accounts; the Financial Regulator has indicated
integrity of the Irish financial services industry. However, it is   that it will not oblige insurance intermediaries under IMD to
fundamental that regulation must be fair and proportionate and       submit audited accounts. Members have expressed concerns
it must be applied with equal vigour to all sectors. Until now,      about this delay as audited accounts place considerable costs
Irish financial regulation has operated a heavy handed, sceptical    on small insurance intermediaries. The Companies Act requires
and sometimes over-the-top approach with small and medium            all companies regulated by the Financial Regulator to submit
sized insurance Brokers. This compares to the light touch,           audited accounts regardless of turnover.
trusting, and what's now proven to be naive approach to the
banks, which has ultimately led Ireland to the precarious
                                                                     At PIBA's recent Annual Conference, held on the 30th of April,
financial position we find ourselves in - a fact which our Chief
                                                                     Minister Brian Lenihan indicated that in view of the delay in
Executive Diarmuid Kelly highlighted on RTE's Questions &
                                                                     completing the revision of IMD2 and in order to address this
Answers on the 19th of January. PIBA believes that in order to
                                                                     very real concern, his officials are in discussions with their
regain industry and public confidence in the Financial Regulator
                                                                     colleagues in the Department of Enterprise, Trade and
a complete overhaul of the Board is necessary.
                                                                     Employment and the Financial Regulator, with a view to
                                                                     removing this auditing requirement for those intermediaries
A number of inequalities exist between the regulatory                who are only regulated under the Insurance Mediation
requirements of the banking sector and the Broker market.            Regulations. PIBA will continue to lobby for the expedient
Currently, banks enjoy major exemptions from the Consumer            transposition of IMD2 in order to remedy the current dual
Protection Code. What are defined as basic banking products -        regulatory system.
current accounts, overdrafts, ordinary deposit accounts and term
deposits of less than one year - were specifically exempted.
                                                                     Minister Lenihan also acknowledged the positive role that the
The Consumer Protection Code provided that these products
                                                                     active engagement of PIBA has with the Department of Finance
were exempted from Factfinding /Reasons Why, as the Financial
                                                                     and the Financial Regulator. He stated that this engagement
Regulator took the view that these products are generic. If the
                                                                     ensures that important legislative and policy developments are
current exemption system is deemed to be acceptable under
                                                                     appropriately informed by the important perspectives and
the Code then a fair approach would dictate that basic
                                                                     expertise of PIBA's membership. The support of our members
insurance products such as house, motor and term assurance,
                                                                     is critical to this process and has been very effective in lobbying
which are demand driven products requiring limited, if any,
                                                                     TD's regarding these issues earlier this year. Members can be
advice, would be treated similarly. PIBA has repeatedly raised
                                                                     confident that PIBA will continue to strive to achieve a fair and
this issue since the introduction of the Code with both the
                                                                     level playing field in relation to regulation for Brokers.
Financial Regulator and the Department of Finance, most
recently at a meeting with Minister Brian Lenihan on the 17th of
February.


The Central Bank and Financial Services Authority of Ireland Act,
2004 provided the Financial Regulator with the power to
administer sanctions in respect of prescribed contraventions by




                                      The Professional Insurance Broker                                                                    9
     PIBA/Zurich Life
     PIBA/Zurich Life
     Broker Sentiment Survey
     Broker Sentiment Survey
       New Survey reveals Dramatic Drop Off in Pension Contributions
       New Survey reveals Dramatic Drop Off in Pension Contributions


     A new survey of independent Brokers conducted by PIBA
        new survey of independent Brokers conducted by PIBA                 disrepute; and make sure that clients realise the benefits that
                                                                            disrepute; and make sure that clients realise the benefits that
     together with EagleStar/Zurich Life has found that dramatic
     together with EagleStar/Zurich Life has found that a dramatic          Brokers offer them ahead of direct channels.
                                                                            Brokers offer them ahead of direct channels.
     70% of respondents say that consumers are reducing their
     70% of respondents say that consumers are reducing their
     pension contributions as the credit crunch continues to bite.
     pension contributions as the credit crunch continues to bite.          Commenting on the findings Diarmuid Kelly, CEO of PIBA, said
                                                                            Commenting on the findings Diarmuid Kelly, CEO of PIBA, said
                                                                            that while some aspects of the survey were not surprising,
                                                                            that while some aspects of the survey were not surprising,
     The first PIBA/Zurich Life Broker Sentiment survey also found
     The first PIBA/Zurich Life Broker Sentiment survey also found          given the global recession and the banking crisis, nonetheless
                                                                            given the global recession and the banking crisis, nonetheless
     that in terms of savings, 64% believe that consumers will
     that in terms of savings, 64% believe that consumers will              the reduction in pension contributions was “deeply worrying”.
                                                                            the reduction in pension contributions was “deeply worrying”.
                                                                                                                                   y
     increase their savings or leave them as they are. This is
     increase their savings or leave them as they are. This is
     significantly different to the pension figure and points to
     significantly different to the pension figure and points to            “This survey confirms what Brokers have been saying to us and
                                                                            “This survey confirms what Brokers have been saying to us and
                                                                            it must serve as severe warning to the Government to arrest
                                                                            it must serve as a severe warning to the Government to arrest
                                                                                        v
     consumers storing cash in the face of uncertainty.
     consumers storing cash in the face of uncertainty.
                                                                            this trend. Otherwise, consumers will be facing pension poverty
                                                                            this trend. Otherwise, consumers will be facing pension poverty
                                                                            and the State will have a massive and unplanned for State
                                                                            and the State will have      massive and unplanned for State
     In relation to life and serious illness cover 82.5% say clients will
     In relation to life and serious illness cover 82.5% say clients will
                                                                            pension bill within a decade or so.”
                                                                            pension bill within decade or so.”
     increase their protection cover or leave it as is.
     increase their protection cover or leave it as is.
                            t
                                                                            Kelly said that the situation will require a careful strategy by the
                                                                            Kelly said that the situation will require careful strategy by the
     Brokers feel they need to be differentiated from the banks, who
     Brokers feel they need to be differentiated from the banks, who        Government and also by the industry to address the situation
                                                                            Government and also by the industry to address the situation
     they feel have dragged the Financial Services industry into
     they feel have dragged the Financial Services industry into            across a number of fronts.
                                                                            across number of fronts.




10
10                                           The Professional Insurance Broker
Brendan Johnston, Pensions Director, Zurich Life added: “This is    mistake moving forward will be to rule out appropriate equity
one of the best times to put money into a pension. It's             based investments.”
probably the wrong decision to move into cash because over
the next ten years the danger will be that inflation creeps back,
and people will need something that provides real returns.”

Johnston added “Unfortunately many have learnt the hard way         *The survey was undertaken during the months of February
that assets need to be diversified and that investing all your      and March among approximately 300 independent Brokers.
assets in one or two stocks or properties is foolhardy. As big a    The results were published in April '09.




                                      The Professional Insurance Broker                                                             11
                 Leading With Humility

                 By Mickey Harte

     Traditionally leadership was viewed as the person 'in charge'         effective than that which is imposed. Live your message: go
     having all the answers and was tantamount to dictatorship. A          from knowing what's right, to doing what's right, to being
     more enlightened view would suggest that quality leadership           what's right. It's essential to adopt the belief that people work
     should be much more humane. Catching your people doing                with you as the leader, never for you. Today's leadership must
     things well can act as a catalyst for even greater productivity.      learn to be more concerned with empowerment than power.
     Research shows that people prefer praise to almost any other
     type of reward - and PRAISE IS FREE.

     Building rapport is central to creating positive relationships
     within any group, team or organisation. It is important that we
     encounter people where they are, not where we would like
     them to be. We need to check our tendency to need to always
     be right and rather work on our capacity to connect. People in
     our organisation need to feel valued by affording them sincere
     appreciation when appropriate, not mere lip service. This is
     especially true for individuals who make those valuable 'assists'
     which often go unnoticed, yet without which the end product
     would not happen. Leadership is much more about facilitating
     unique individuals to deliver the best that they have got than
     about striving for a team of clones.
                                                                           Mickey Harte and Michael Hoare (incoming PIBA Chairman)
     Quality leaders view their people as a resource. They care            True leaders realise that answers are important, but questions
     about their people and what is going on in their lives. The           are essential. When you ask questions of people, you
     ability to communicate is a vital skill in this role. This involves   empower rather than overpower them. Listening to others is a
     active listening; that is, listening to understand not listening to   sign of strength. Ultimately a leader's target is to be a liberator,
     respond. Good leaders communicate frequently. We must be              not a limiter of people's highest talents. In the final analysis the
     about the business of helping our people search for and               growth of your company is directly proportional to the growth
     recognise their added value. Industriousness and enthusiasm           of your people.
     (both of which are infectious) must be our trademark.
     (Football analogy - Brian Dooher's work rate on the Tyrone
     team virtually demands a similar response from those around
     him.)

     Leadership and discipline are essential companions. Aristotle
     wrote, 'We are what we repeatedly do, excellence therefore is
     not an act but a habit.' Success usually accompanies strict           Mickey Harte is the current manager of the
     attention to little details. Discipline of choice is much more        Tyrone Gaelic Football Team.




12                                           The Professional Insurance Broker
             Never Sell to a Stranger

             By Robert Hayes-McCoy

Many years ago, when I was working in an insurance Brokerage in             !    The more often you use the word 'you' in your
Dublin, my attention was captured by an article written by David                 communications, the more your reader will like you and the
Ogilvy, Chairman of one of the greatest, and certainly one of the                more they will pay attention to what you are saying.
most successful, direct marketing agencies of all time: Ogilvy and
                                                                            !    A large type size is more user-friendly, especially for the
Maher.
                                                                                 40+ age group. (Keep in mind that we've all been warned
David's article was titled: 'Never Sell to a Stranger'. Now I have               by our parents against the dangers of small type.)
to confess to you that at the time this advice puzzled me greatly.
                                                                            !    The first paragraph is the most important paragraph of your
My immediate reaction was 'How on earth are most of us going
                                                                                 entire letter. Don't waste it by talking about yourself. Use it
to make money if we're only prepared to sell our products and
                                                                                 to tell your reader about a benefit that they will receive.
services to people we know?'
                                                                            !    Before you sign off on your next important sales letter, read
But like all catchy headlines, it's the 'customer relationship
                                                                                 it aloud to yourself. If it sounds dull ... believe me, it will be a
marketing' (CRM) success story behind the headline, rather than
                                                                                 dull read as well.
the headline itself, that's worth looking into. Because what David
Ogilvy was recommending to all success seekers was the concept              !    Avoid jargon - use plain English. It works better. Every time!
of keeping in regular touch with their customers and business
                                                                            !    Pay attention to the appearance of your letter. A letter
contacts and making friends with them.
                                                                                 written in small tight type and with mean narrow margins
                                                                                 looks exactly that: small, tight, narrow minded and mean.
It's far easier to sell to a friend than a stranger
                                                                            !    Be cheerful! Write with a smile on your face and what you
As David says, it is far, far, easier for you to sell, and to sell more,         say will come out smiling on the page as well. Everybody
to a friend than it is to sell to a stranger. The reason for this is that        likes to do business with a cheerful person.
a friend knows who you are and where you are coming from. In
                                                                            Robert Hayes-McCoy is an award winning copywriter and author
short, friends will trust you! Friends will seek you out. Friends will
                                                                            of 'Persuasive Direct Marketing - what you say and how you
recommend you to other members of their family and to their
                                                                            write it' published by Oak Tree Press. For details about his in-
own friends and to their friend's friends.
                                                                            house training courses, and more articles, visit his website at
In short - friends will become valuable unpaid sales reps for you           www.The-Real-McCoy.com.
and your business. Friends will give you far better testimonials
                                                                            This article appears courtesy of Caledonian Life. It is an edited
than the ones you will get from standard customers. Friends will
                                                                            version of that which appeared in the October edition of their
make your business dealings more enjoyable. And most
                                                                            monthly E-Newsletter, the 'Calezine' and formed part of their
important - friends will bring out the best in you.
                                                                            ongoing commitment to 'Building better business' in partnership
                                                                            with Brokers.
Ten professional tips showing you how to improve your
written communications by letter and by email                               The Caledonian Life Broker Centre contains a broad range of
!    Personalise - a personalised letter or email will attract far          support material and literature to help you reach both potential
     more attention to what you are saying and pull in a far                and existing clients. To see how these materials can help meet
     greater response.                                                      your business development needs, contact your Caledonian Life
                                                                            Broker Consultant or visit the Caledonian Life Broker Centre at
!    Use short sentences and short paragraphs in your letters               esp.caledonianlife.ie.
     and emails. Research shows that readers tend to skip
     paragraphs that are longer than six lines.                             If you'd like to start receiving Caledonian Life's monthly
                                                                            'Calezine' simply send your email address to
!    Sign your letters with a legible blue-ink signature. The more          marketingsupport@caledonianlife.ie.
     legible your signature is the more your reader will trust you.




                                          The Professional Insurance Broker                                                                             13
             Time to get 'preoccupied'
             with unoccupied property!
             By Nigel Dawkins, Risk Control Manager, RSA Insurance

Research conducted by the largest property insurer, RSA Insurance, in            !      The tenant to whom the property was rented has gone out of
January 2009 provides valuable insight into the growing scale of                        business.
unoccupancy among residential and commercial properties.
                                                                                 !      The tenant is still bound by the lease but has vacated the
Some key findings include:                                                              property and it has not been possible to locate a replacement
                                                                                        tenant.
!     In 2002, unoccupied residential properties were at 140,000
      throughout Ireland. By December 2008 this figure had risen to              !      The property may have been bought with a view to its site value,
      350,000 properties (an increase of 150%).*                                        where existing building(s) will be demolished and new structures
                                                                                        built.
!     Private dwelling properties make up the largest proportion of
      unoccupancies (66%), followed by holiday homes at 19% and                  !      The property may have been bought with a view to its
      apartments (16%).                                                                 redevelopment and / or refurbishment, which in turn may or
                                                                                        may not require planning permission.
!     Of those counties with an unoccupancy rate greater than the
      national average (15%), a large proportion (66%) is made up of
      rural counties and predominantly those in the west of Ireland. A
      percentage of this is influenced by the scale of investment and
      holiday homes in these areas.

!     The downturn in the economy has put previously thriving
      businesses under threat of closure. Liquidations increased from
      273 in 2007 to 575 in 2008, and indications are that this upward
      trend will increase and gather pace during 2009.

!     All of the 'expert' forecasts suggest that GDP will shrink significantly
      during 2009. What this points to is an increase in business failures
      across all sectors, with a significant increase in the number of
      commercial and industrial premises becoming unoccupied. It is no
      surprise that, with the greater concentration of such properties, the
      estimated office unoccupancy rate in Dublin comes out on top at
      15.8%.**

In essence, with the economic landscape set to continue its downward
spiral, the trend of increasing numbers of unoccupied properties will
continue. Therefore it is important for insurers, Brokers and policyholders
to be very aware of the potential impacts that attach to this escalating         Implications for Insurance
phenomenon.
                                                                                 From an insurance perspective the primary issue relates to increased risk
While the reasons for unoccupied properties may appear obvious, it is            for the premises and the need to ensure disclosure to the insurer of
worth reminding ourselves of some of the primary explanations as to              unoccupancy as a key material fact impacting on the policy cover.
why premises lie vacant.
                                                                                 Should a property become unoccupied during the course of the policy
!      The building may have been just purchased by a new landlord               year, the insured must advise the Broker / insurer of the revised
       who has not yet found a tenant for the house and the premises             occupancy details as it is a material fact and will change the terms of the
       remains unoccupied - in this case the property 'may' become               policy in most cases.
       occupied after a few weeks - or remain unoccupied for a much
       longer period.                                                            The approach to how insurers manage a specific unoccupied property
                                                                                 will depend on the circumstances of that unoccupancy and may require
!      A property may need renovation before becoming suitable for a             a questionnaire to be completed. In the main however restrictions will
       tenant - in this case the insurers of the unoccupied property will        be applied to elements of the policy, especially in the event of a long
       need details of the type of renovation, the estimated duration of         term unoccupied risk being identified. Often requests to cover new or
       the works and site security before appropriate cover can be               newly unoccupied properties will only be considered for existing clients,
       determined.                                                               or where an unoccupied property is incidental within a portfolio of
                                                                                 properties.
!      The property may have been purchased as a holiday home but,
       in uncertain economic times, may not be utilised by the owners
       or for short term holiday rental for considerable periods.                For more information on this topic or any Risk Management related
                                                                                 material, please contact the RSA Risk Control Unit.
!      The previous owner may have died and the property is now
       undergoing probate or up for sale so that the proceeds can be             * Source: CSO and Finfacts
       added to the estate.                                                      ** Source: CBRE 2009 Outlook Report




                                             The Professional Insurance Broker                                                                                 15
                Pension Positives

                By Kevin Fitzsimons, Pensions Development Manager, Canada Life

     Positive news on pensions may seem thin on the ground           knowing at this juncture what changes are coming but for
     presently but the global economic downturn and the recent       company directors in particular, we cannot be sure that
     ‘mini budget’ changes just means that we have to look a bit     maximum funding rules as we know them today will remain
     harder to find the good news and the opportunities. Some        unscathed.
     examples are as follows:
                                                                     Another deadline looming is the 31st of October 2009,
     PAYE workers who are eligible to contribute to either a         which is the last chance for high earners to benefit
     Personal Pension, a PRSA, AVC scheme, AVC PRSA or an            from the €275,239 earnings cap where they opt to
     occupational scheme may now be entitled from May                backdate pension contributions to the 2008 income tax
     2009 to PRSI/health levy relief at a rate of 8% or              year. From 2009 this cap is reduced to €150,000.
     indeed 9% on some or all of their pension
     contribution if they have earnings in excess of                 The penal income levies which are not allowable as part of
     €52,000 and €75,036 respectively, where heretofore if           pension tax relief may spark a review of spousal
     their earnings were in excess of €52,000 they may have          employment for the self-employed and company directors.
     only been entitled to PRSI relief at 2%. This is due to the     There is already an income tax advantage in employing a
     substantial increase in the PRSI threshold from €52,000 to      spouse in the business but now a self-employed individual
     €75,036 and the health levy increasing from 2% to 4% on         or company director who earns €150,000 is liable to a 4%
     income up to €75,036 and to 5% for people with earnings         income levy whereas two spouses earning €75,000 each
     above that. Combined with income tax relief of 41%, the         are liable to a 2% income levy each.
     total relief can now come in at a massive 50% (41% +
                                                                     Another area quite popular currently is the ‘last minute’
     9%) for high earners! (Important to note that only PAYE
                                                                     Tax Free Cash Arrangement for employees and/or
     people are entitled to PRSI/Health Levy relief but the self-
                                                                     company directors who are at or approaching Normal
     employed are not entitled to PRSI/Health levy relief at all.)
                                                                     Retirement Age. They can benefit at Normal Retirement Age
     Put another way, if you express the tax relief, PRSI
                                                                     from up to 1.5 times final remuneration as a tax free lump
     relief and health levy relief as a return on your
                                                                     sum from an approved pension scheme if they have 20
     money, a pension contribution for a high earner now
                                                                     years paid service completed with their employer and if
     represents a return of 100% on every pension
                                                                     they don’t have previous retained benefits. Some of the
     contribution less charges and I don’t believe this can
                                                                     business being generated here is based on a concern that
     be achieved through any other investment currently.
                                                                     tax-free cash lump sums may be taxed in the next budget.
     We really need to point this out to our PAYE clients.
                                                                     This idea works just as sweetly for spouses of directors or
     A new levy on life assurance of 1% which at the time of         self employed people who have more than 20 years
     writing (the rules may change on this) applies to almost all    service. Canada Life have done a number of these
     life office business, including pensions, from 1st of August    arrangements in recent months for a very competitive one
     2009 can be avoided by anyone making an SP or transfer          off charging structure and have turned funds around in a
     payment before the 1st of August.                               matter of days.

     With Minister Lenihan committed to reviewing the tax
     benefits attached to all approved pension schemes in the
     next budget, a degree of urgency has now been
     introduced where clients should act now to benefit
     from the existing tax breaks. We have no way of




18                                       The Professional Insurance Broker
                 Buying in France?
                 Buying in France?

                 By Rachel Doyle, Director of PIBA Network Services
                 By Rachel Doyle, Director of PIBA Network Services

     The first step to buying property in France is of course finding
     The first step to buying a property in France is of course finding   In France conveyancing is carried out by notary; it is very
                                                                          In France conveyancing is carried out by a notary; it is very
       property in France. There are number of companies selling
     a property in France. There are a number of companies selling        important that you appoint         notary who is multilingual.
                                                                          important that you appoint a notary who is multilingual. A
     French properties in the Irish market, but please note that these
     French properties in the Irish market, but please note that these    notary is      public official who ensures that all deeds are
                                                                          notary is a public official who ensures that all deeds are
     companies are not regulated. Ensure that you research
     companies are not regulated. Ensure that you research                authentic and that they cannot be contested. Notaries can also
                                                                          authentic and that they cannot be contested. Notaries can also
     thoroughly the area that you wish to buy in before you think
     thoroughly the area that you wish to buy in before you think         assist in drafting the preliminary sales agreement. They are
                                                                          assist in drafting the preliminary sales agreement. They are
     about purchasing.
     about purchasing.                                                    objective in the advice that they give and act impartially. Usually
                                                                          objective in the advice that they give and act impartially. Usually
                                                                          the notary acts for both the seller and the purchaser. The fee
                                                                          the notary acts for both the seller and the purchaser. The fee
     There are two options available for investors. The first option is
     There are two options available for investors. The first option is   for the notary is set by French law and is always paid by the
                                                                          for the notary is set by French law and is always paid by the
     Leaseback properties; these are properties that will be
     Leaseback properties; these are properties that will be              buyer. The fees relate to the conveyancing of the property and
                                                                          buyer. The fees relate to the conveyancing of the property and
     managed for you, ensuring guaranteed income, and you can
     managed for you, ensuring guaranteed income, and you can             also the cost of registering the mortgage. The conveyancing fee
                                                                          also the cost of registering the mortgage. The conveyancing fee
     also get   full VAT refund on the investment. You can also
     also get a full VAT refund on the investment. You can also           ranges between 6-8% of the purchase price and the cost of
                                                                          ranges between 6-8% of the purchase price and the cost of
     purchase an independent property to let.
     purchase an independent property to let.                             registering will range from 1-3% of the mortgage amount.
                                                                          registering will range from 1-3% of the mortgage amount.
     When you find the house of your dreams get a structural survey
     When you find the house of your dreams get structural survey         After the approval of your mortgage copy of the mortgage
                                                                          After the approval of your mortgage a copy of the mortgage
     completed and/or get advice from professionals i.e. architects,
     completed and/or get advice from professionals i.e. architects,      offer is sent to you and to the notary. You have to wait ten days
                                                                          offer is sent to you and to the notary. You have to wait ten days
     plumbers and electricians.
     plumbers and electricians.                                           to accept the offer but you cannot wait more than 30 days.
                                                                          to accept the offer but you cannot wait more than 30 days.
                                                                          When you want to accept the offer you sign the acceptance
                                                                          When you want to accept the offer you sign the acceptance
     When you are happy that you wish to go ahead you will then
     When you are happy that you wish to go ahead you will then           form and send it back to your advisor. You should also note
                                                                          form and send it back to your advisor. You should also note
     need to sign a preliminary sales agreement. This ensures that
     need to sign preliminary sales agreement. This ensures that          that like Irish lenders, French lenders do require you to have
                                                                          that like Irish lenders, French lenders do require you to have
     no one else will be able to purchase the property you have
     no one else will be able to purchase the property you have           Life cover. It is also advisable to ensure that you have building
                                                                          Life cover. It is also advisable to ensure that you have building
     chosen. After signing the agreement you have seven days to
     chosen. After signing the agreement you have seven days to           and contents insurance.
                                                                          and contents insurance.
     change your mind. The agreement should state that the
     change your mind. The agreement should state that the
     purchase of the property is subject to obtaining mortgage
     purchase of the property is subject to obtaining mortgage            The notary will then request the funds when you need them
                                                                          The notary will then request the funds when you need them
     approval. At this time you will be asked to pay deposit, which
     approval. At this time you will be asked to pay a deposit, which     and prepare deed. Once you sign the deed and necessary
                                                                          and prepare a deed. Once you sign the deed and necessary
     is normally 10% of the purchase price of the property. This is
     is normally 10% of the purchase price of the property. This is       documents you will be able to purchase your dream holiday
                                                                          documents you will be able to purchase your dream holiday
     paid to the estate agent or notary.
     paid to the estate agent or notary.                                  home.
                                                                          home.

     The next step is to obtain mortgage. There are many French
     The next step is to obtain a mortgage. There are many French         If you already own         French property and would like to
                                                                          If you already own a French property and would like to
     lenders that allow non-residents to raise        mortgage on
     lenders that allow non-residents to raise a mortgage on a            remortgage your current Irish or French mortgage along with
                                                                          remortgage your current Irish or French mortgage along with
     French property. You can also raise money on property that
     French property. You can also raise money on a property that         loans you can do this against your French property. You can
                                                                          loans you can do this against your French property. You can
     you own in Ireland through an Irish lender. Like Irish lending the
     you own in Ireland through an Irish lender. Like Irish lending the   also avail of equity release products against the French property
                                                                          also avail of equity release products against the French property
     amount you will be granted will depend on the term of the
     amount you will be granted will depend on the term of the            with some French lenders.
                                                                          with some French lenders.
     mortgage and your existing mortgages and loans. Most French
     mortgage and your existing mortgages and loans. Most French
     lenders will expect that your overall financial commitments i.e.
     lenders will expect that your overall financial commitments i.e.     We are delighted to announce that PIBA Network Services t/a
                                                                          We are delighted to announce that PIBA Network Services t/a
     any Irish mortgages, any loans and the new French mortgage,
     any Irish mortgages, any loans and the new French mortgage,          PIBA Mortgage Services now offer both French and Turkish
                                                                          PIBA Mortgage Services now offer both French and Turkish
     should not exceed one third of your gross regular income.
     should not exceed one third of your gross regular income.            lending through BNP Paribas.
                                                                          lending through BNP Paribas.
     In France you can avail of either repayment mortgage or an
     In France you can avail of either a repayment mortgage or an
     interest only mortgage. If you decide to opt for          variable
     interest only mortgage. If you decide to opt for a variable
     mortgage some of the lenders start out on an initial fixed rate
     mortgage some of the lenders start out on an initial fixed rate
     lasting 3, 12, 24, 60 or 120 months.
     lasting 3, 12, 24, 60 or 120 months.




20
20                                          The Professional Insurance Broker
                     Now more than ever, clients must
                     plan ahead for their Financial Future
                     By Gavin Brennan, Regional Manager, New Ireland Assurance

     Today there are six workers supporting every retired person: however it is      For example, PAYE employees could benefit from significant tax relief on their
     estimated that the cost to the Government of providing the State Pension in     pension savings of up to 49%, and any growth earned by a pension
     Ireland will more than double by 2050, when there will be just two adults       investor’s fund is currently tax-free.
     working to support one pensioner.
                                                                                     Clients with a low tolerance for risk or a relatively short time to go to
     One might wonder if the current State Pension is sustainable as the tax         retirement should be advised to invest in more cautious assets. In fact, New
     revenue to support it will reduce dramatically over the next 40 years. Now,     Ireland has recently launched two new Government Bond Funds maturing in
     more than ever, workers need to take personal responsibility to fund their      2014 and 2016 to meet this demand. The treasury bonds work by investing
     own income in retirement.                                                       in bonds issued and backed by the Irish Government and will provide security
                                                                                     to investors when held to maturity.
     There is no doubt that 'Ireland inc.' is undergoing economically challenging
     times: however a pension is still regarded as being the best long-term option   By remaining in the fund until the maturity of the underlying bond investors
     available in the savings market today and you should encourage your clients     will also benefit from a predictable return at the maturity date as all income
     to continue to fund their pension
     during the good times and bad.
     After all, our retirement is likely to
     be a significant proportion of our
     lives, because life expectancy
     continues to increase for the Irish
     population. According to the Central
     Statistics Office, a man retiring at
     age 65 now can expect to live to
     85 and a woman retiring at age 65
     can expect to live to 88.

     The latest research from the
     Pensions Board revealed that 4 out
     of 5 people without a pension
     believed that the State pension
     would not be sufficient if they were
     to retire that year. The State
     Pension (Contributory) currently
     provides a weekly income to a
     single person of just €230. This is
     unlikely to be enough to fund the
     kind of retirement lifestyle that
     people dream of and is more likely
     to mean a big drop in their standard
     of living.

     Some of your clients may question
     whether now is the best time to
     invest in a pension, given the
     turbulence experienced by markets
     over the last number of months.
     The simple answer to this is that we
     believe there is never a bad time to
     invest in a pension. Your clients are
     not only currently buying into
     markets at historically low values
     with a view to selling high in years
     to come, but also there are
     significant tax benefits still available
     for those investing in a pension.




24                                                 The Professional Insurance Broker
and capital payments on the bond
are known from the outset. For
example, the 2014 Government
Bond Fund will invest in the 4%
Treasury Bond, which will mature
on 15th January 2014, while the
New Ireland 2016 Government
Bond will invest in the 4.6%
Treasury Bond, which will mature
on 18th April 2016.

The concept of a Lifestyle Pension
Fund is another alternative that you
can feel confident recommending
to your clients. In 1992, New
Ireland pioneered the concept of
pension fund lifestyling in the Irish
market, with our unique lifestyle
investment strategy – IRIS
(Individual Retirement Investment
Service). The IRIS strategy is a
custom-built pension portfolio,
which recognises that a single fund
may not be able to provide the right
strategy for all pension investors. It
is one of Ireland’s only investment
strategies that lifestyles from
inception to retirement and not just
for the last 5-10 years.

The core principle of IRIS is that
asset allocation strategies have to
change as investors’ needs change
over time. Someone investing to
retire in 20 years requires a very
different investment portfolio to someone investing to retire in 2 years – and
                                                                                                                   by gradually switching into less volatile assets such as government bonds and
IRIS incorporates a wide range of portfolios to suit each individual’s need. IRIS
                                                                                                                   cash as the individual moves closer to retirement.
is built around the well-established historical principle that stocks and shares
have outperformed other investment classes over the long term, but can be                                          And it really works – for example, those invested in New Ireland's IRIS Fund
very volatile in the short term.                                                                                   and who retired in March this year have achieved positive growth on their
                                                                                                                   fund of 7%* compared to losses experienced by the average pension
The IRIS philosophy is therefore intended to generate significant growth by
                                                                                                                   managed fund of over 30%.**
investing in equities over the long term, but to then consolidate any growth
For further information on New Ireland’s Government Bond Funds and IRIS Fund, please contact your Broker consultant.

* Source: MoneyMate. 12-month performance figures as at 31st March 2009 and gross of tax and fund management charges.
** Source: Mercer Pension Report 12-month performance figures as at 31st March 2009 and gross of tax and fund management charges.

 Warning: The value of your investment may go down as well as up.
 Warning: Past performance is not a reliable guide to future performance.
 Warning: This product may be affected by changes in currency exchange rates.
 Warning: You cannot choose to cash in your investment before 19th May 2013.

The content of this document is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment or to subscribe to any investment management or advisory service. Terms and
conditions apply. It should also be noted that tax relief is not automatically granted, you must satisfy the Revenue requirements.
New Ireland Assurance Company plc is regulated by the Financial Regulator and is a member of the Bank of Ireland Group.




                                                                The Professional Insurance Broker                                                                                                                            25
                 Aviva Irl BlackRock European
                 Absolute Return Strategies Fund
                 By Vincent Devlin, Fund Manager


       Hibernian Aviva has just launched a European Absolute Return Strategies Fund, managed by BlackRock, one of the
       world’s largest asset managers with US$1.28 trillion in assets under management. In this article Vincent Devlin, the
       Fund Manager of the Aviva Irl BlackRock European Absolute Return Strategies Fund explores how these absolute
       return funds work and what an investor should look for when investing in an absolute return fund.


     The concept of absolute return investing is actually very simple:      that the stock will have fallen to a price lower than when the
     an investor with an ‘absolute return’ strategy aims to generate        deal was struck – thereby making a profit on the transaction.
     positive returns irrespective of financial market conditions, by
     deploying techniques that are able to profit from both the ups         While this may sound complex, the approach is effectively the
     and downs in markets and stock prices.                                 reverse of traditional ‘long-only’ investing. And it's logical too –
                                                                            after all, if a Fund Manager makes a profit from investments
     Typically, due to the types of investment strategy pursued by          that go up, why shouldn’t he be able to do the same from
     most absolute return funds, investors should not expect to             investments that fall in value?
     partake fully in the financial benefits that are offered in positive
     market environments, but, generally, should expect to                  The enlarged toolbox that facilitates absolute
     consistently beat cash deposits by an appreciable margin. This         return investing
     means that absolute return investing is fundamentally different        Some time ago, managers of investment funds were given a
     to the traditional way people invest in stocks and shares.             much-enlarged toolbox in terms of the investments they were
                                                                            able to utilise within the management of certain fund types.
     The vast majority of investment funds follow a ‘relative return’
                                                                            Critically, this extension of powers included the ability to create
     strategy. For example, European equity funds will aim to
                                                                            ‘synthetic-short investments’ through the use of cash-settled
     generate good long-term returns, and certainly outperform the
                                                                            derivatives.
     stockmarket or sector in which they invest. However, such
     funds will broadly follow the fortunes of the underlying               Such positions are mainly achieved by investing in Contracts for
     stockmarkets in which they invest, so if the constituent share         Difference (CFDs). CFDs are an efficient way of securing the
     prices fall then the fund is likely to fall as well.                   effect of a short investment, as they allow investors to participate
                                                                            in the price movement of a stock without having to take full
     In fact, the only tools available to a Fund Manager to protect
                                                                            ownership, hence the term 'synthetic-short investment'.
     investors from market declines are astute stock picking and the
     decision to defensively hold a larger proportion of cash than          The addition of these investment powers means that absolute
     normal. So for a relative return investor in a traditional             return Fund Managers now have a number of traditional and
     investment fund, accepting periods of short-term pain for              derivative-based investment techniques available to them. As in
     eventual long-term gain is very much required wisdom.                  the example of the Aviva Irl BlackRock European Absolute
     Conversely, an absolute return investor is looking for less            Return Strategies Fund, these include traditional long holdings
     volatility and returns that do not necessarily mirror stockmarkets.    in European shares, synthetic long and short investments in
                                                                            European shares (as described above), and pair trades.
     How an absolute return portfolio can work                              Notably, the latter is regarded a very effective strategy for
     Absolute return investing provides access to an investment             eliminating a high degree of market risk, inherent with equity
     toolbox with much more choice than that of typical relative            investing, and, therefore enhancing the effect of a Fund
     return investing, resulting in an ability to make profits by           Manager’s stock picking skills in generating performance. The
     purchasing shares that are expected to rise, and ‘going short’         following is an example of how pair trading works in practice:
     the stocks that are expected to fall.
                                                                            If we decide that Oil Company A is a very good investment, but
     Simplistically, ‘going short’ is industry jargon for a strategy in     think the reverse of Oil Company B, we can agree to buy
     which a Fund Manager either agrees or has the option to sell a         shares (go long) in Company A and sell shares (go short) in
     stock that they do not own. The sale is made on the                    Company B. As both are in the same industry, by buying stocks
     assumption that they will be able to buy the stock at a lower          in one oil company and selling another, we are removing a
     amount than the price at which they ‘went short’.                      large degree of market exposure.

     The key point is that the Fund Manager does not own the stock          Instead, we are exploiting the expected differential of
     at the time they ‘went short’, which means they are forecasting        performance between the two investments. The perfect result




26                                           The Professional Insurance Broker
                 The Possibilities of Outsourcing

                 By Keith Smyth, Partner, Corporate and M&A Department, Dillon Eustace

     Like all businesses, Brokers are increasingly eager to find a        necessary, subcontract this work so that the Broker ultimately
     means of reducing overheads that will allow them to reduce           only needs to deal with one person.
     costs but maintain, or in some cases improve, the level and
                                                                          What should be kept in mind is that the Brokerage remains
     standard of service they are currently providing to both
                                                                          ultimately liable to its clients and agencies for the service it
     customers and life agencies. Outsourcing is increasingly being
                                                                          provides, and accordingly it must be satisfied that it can
     considered as a possible means of achieving these goals.
                                                                          adequately monitor the standard of work provided by the
     Outsourcing is effectively a transaction or series of transactions   supplier(s). This is also fundamental from a regulatory
     in which an organisation that previously provided services using     perspective as the Broker will remain responsible for ensuring
     its own internal resources opts to engage a third party to           the business is conducted in a proper manner and in
     provide the resources necessary to deliver those services. This      compliance with all applicable laws and regulations. As a
     will often involve a transfer of the whole or part of those          regulated entity the Broker must ensure that it will be in a
     internal resources (whether they be assets, employees or both)       position to comply with its regulatory obligations at all times.
     to an external supplier on the basis that the organisation will
                                                                          2. Employees
     purchase services from that third party for a certain period of
     time.                                                                The scope of the services to be outsourced will affect
                                                                          employees in a number of ways. The legislation governing
     Prior to engaging a third party to provide such services a Broker
                                                                          transfer of undertakings, the European Communities
     contemplating outsourcing should consider a number of issues,
                                                                          (Protection of Employees on Transfer of Undertakings)
     including (1) the scope of services to be outsourced, (2)
                                                                          Regulations 2003 (TUPE Regulations) must be borne in mind
     whether and to what extent this will impact employees, (3)
                                                                          at all times. The TUPE Regulations effectively provide that
     data protection issues, (4) the cost and perceived savings and
     (5) the possibility of the reintegration of the outsourced           where an undertaking or business, whether in whole or part, is
     services at a later date.                                            transferred from one entity to another, the employees of that
                                                                          undertaking or business (or such part that is transferring) have
     1. Scope of services                                                 the right to transfer also. Together with an entitlement to
     The most commonly outsourced areas include functions such            transfer, the employees have the right to maintain their existing
     as payroll, accounts, IT services and human resources. This          terms and conditions following the transfer.
     may involve a consideration of what aspect of the business will      It is beyond the scope of this article to address all aspects of
     be outsourced, what physical assets may need to transfer, what       the TUPE Regulations. In short, though, the transfer of a
     confidential information will be required to be shared and, as       function to a third party supplier may entitle employees who
     will be discussed below, what will happen to those employees         formerly performed that function in the Brokerage to 'follow'
     who currently perform this function.                                 the function and transfer to the new service supplier.
     The Broker should research the available outsourcing packages        Depending on the scope of the function and size of the
     to determine what is best suited to its business. It may             transferring undertaking, it may be a condition of the transfer
     determine that it is more economical to source a number of           that the relevant employees transfer and the transaction
     different suppliers for the various functions it wishes to           document may address the allocation of liabilities arising from
     outsource; however this will come with the additional                any potential employment issues between transferor and
     complexities of managing a number of contracts and                   transferee in this regard together with other pertinent issues.
     relationships. A Broker may choose to engage a third party
                                                                          3. Data Protection
     who offers a complete package of those functions required by
     the Broker, or a third party who will undertake to manage or, if     Data protection is an area that requires particular attention in




28                                           The Professional Insurance Broker
Certain Functions of Your Business

 the context of any proposed outsourcing of services that will        important areas of its business may be something that it is
 require the transfer of client information. This will be relevant    difficult to put a monetary value on. Whatever the reason for
 where, for example, customer mailings are outsourced or              the transfer of the service, the Broker should ensure that the
 where employee data is transferred to a third party when a           service's contract with the third party supplier is sufficiently clear
 payroll function is outsourced.       The Broker must ensure,        on the cost of the service and should address issues such as
 normally through the provisions of the services contract with        liability in the case of a breach of the supplier's obligations
 the third party supplier, that the supplier undertakes to comply     under the agreement.
 with all applicable data protection and regulatory requirements.
                                                                      5. Termination
 It is essential that a confidentiality agreement be executed at an
                                                                      It is likely at some point that the Broker may wish to return to
 early stage and at the very least prior to any exchange of
                                                                      the internal sourcing of one or more of the outsourced services.
 personal data to ensure that the supplier is under an obligation
                                                                      The termination of the outsourcing relationship may arise in a
 to treat the information as confidential and only use the
                                                                      number of ways. It may be catered for in the services contract
 information in the manner permitted by that agreement. The
                                                                      by way of a list of events which will entitle one or other party to
 agreement should also provide that the supplier take adequate
                                                                      terminate the contract, the outsourcing may be for a fixed term
 safety precautions in its handling of the information.
                                                                      or the termination may be as a result of a fundamental breach
 Any transfer of personal data outside of the European                of the agreement by one of the parties.
 Economic Area is prohibited unless certain conditions, including     The termination and reintegration of the services will effectively
 adequate levels of protection in the jurisdiction of the supplier,   involve a reversal of the initial steps undertaken to outsource
 are met.                                                             the service. For example, if employees have transferred with
 The Broker should also ensure that it retains the rights to any      the undertaking then these employees or the employees who
 intellectual property transferred. One example here might            perform the function at the time of termination may be entitled
 include the client database or client book. The intellectual         to transfer to the Broker. As before these employees will be
 property aspects of the data should also be addressed as part        entitled to retain the same terms and conditions to which they
 of the confidentiality agreement, which should ensure that any       were entitled when working for the supplier.
 such intellectual property is not used by the supplier following     Assets may need to be returned to the Broker and the Broker
 the cessation of the outsourcing relationship.                       will want to ensure that any confidential information supplied to
 4. Cost and savings                                                  enable the performance of the contract is returned. It is
                                                                      advisable to deal with this possible reintegration and return of
 In order to determine the cost-effectiveness of outsourcing a        assets in as much detail as possible when drafting the original
 Broker should undertake a detailed review of its current cost        services contract, particularly to cater for a scenario where the
 base, the cost of transitioning to the performance of that           termination arises as a result of a failure by the supplier to
 function by a third party, including any potential 'teething'        provide the services to the standard required by the agreement.
 problems and the possibility of reintegrating the function at a
 later date whether as a result of issues which have arisen or
 due to the natural termination of the outsourcing contract.

 In some cases, cost saving will not be the reason for                Keith Smyth is a partner in the Corporate and M&A
 outsourcing and the achievement of a better standard of              Department of Dillon Eustace, 33 Sir John Rogerson's Quay,
 service in terms of the outsourced function together with the        Dublin 2. Contact Keith at 01 6670022 or at
 ability of the Broker to concentrate on what it views as the more    keith.smyth@dilloneustace.ie.




                                                        The Professional Insurance Broker                                                      29
                  PIBA Activities
           Date   Subject Matter                                         External Party                     Attended by

     09/03/2009   Zurich Review                                          Zurich                             Dominick McGrath, Diarmuid Kelly

     10/03/2009   Canada Life Marketing                                  Canada Life                        Dominick McGrath, Pat McEntee

     11/03/2009   Pearl Group Review                                     Pearl Group / Scottish Provident   Dominick McGrath, Liam Carberry

     12/03/2009   Irish Life Review                                      Irish Life                         Dominick McGrath, Diarmuid Kelly

     12/03/2009   Zurich Review                                          Zurich                             Dominick McGrath, Pat McEntee

     20/03/2009   General Insurance                                      Spike                              Dominick McGrath, Enda Burns

     23/03/2009   Compliance Seminar                                     LIA                                Fiona O'Connor

     25/03/2009   Hibernian Aviva Review                                 Hibernian Aviva                    Dominick McGrath, Diarmuid Kelly

     25/03/2009   New Ireland Review                                     New Ireland                        Dominick McGrath, Diarmuid Kelly

     27/03/2009   Friends First Review                                   Friends First                      Dominick McGrath, Diarmuid Kelly

     27/03/2009   Zurich Review                                          Zurich                             Dominick McGrath, Diarmuid Kelly

     30/03/2009   Business Development Activities                        Hibernian Life & Pensions          Diarmuid Kelly, Rachel Doyle

     30/03/2009   Mortgage Activities                                    ICS Building Society               Rachel Doyle, Michael Leyden, Karl Deeter

     30/03/2009   Canada Life Review                                     Canada Life                        Dominick McGrath, Diarmuid Kelly

     31/03/2009   Business Development Activities                        Cardif Pinnacle                    Rachel Doyle, Diarmuid Kelly

     01/04/2009   Standard Life Review                                   Standard Life                      Dominick McGrath, Diarmuid Kelly

     02/04/2009   Mortgage Activities                                    Mortgage Brain                     Rachel Doyle, Diarmuid Kelly

     02/04/2009   Mortgage Activities                                    Haven Mortgages                    Rachel Doyle

     02/04/2009   Caledonian Life Review                                 Caledonian Life                    Dominick McGrath, Diarmuid Kelly

     02/04/2009   Irish Life Review                                      Irish Life                         Dominick McGrath, Diarmuid Kelly

     06/04/2009   Forum on Life Insurance                                Forum                              Dominick McGrath, Diarmuid Kelly

     08/04/2009   Mortgage Activities                                    Paddy Stronge                      Rachel Doyle

     15/04/2009   Business Development Activities                        Best Doctors                       Rachel Doyle, Diarmuid Kelly, Dominick McGrath

     20/04/2009   Kennco Review                                          Kennco                             Dominick McGrath, Maurice Harnett

     21/04/2009   Reducing the Risks of Investment Product Mis-selling   Dillon Eustace                     Elizabeth Smith

     21/04/2009   LIMRA                                                  LIMRA                              Dominick McGrath

     22/04/2009   Mortgage Activities                                    permanent tsb                      Rachel Doyle, Jimmy Cumiskey

     22/04/2009   Mortgage Activities                                    KBC Homeloans                      Rachel Doyle, Jimmy Cumiskey

     23/04/2009   Business Development Activities                        Friends First                      Rachel Doyle, Paul Kelly

     27/04/2009   Business Development Activities                        Cardif Pinnacle                    Rachel Doyle, Paul Kelly

     27/04/2009   Business Development Activities                        Hibernian General                  Rachel Doyle, Paul Kelly, Diarmuid Kelly

     29/04/2009   Business Development Activities                        WH Woods                           Rachel Doyle, Diarmuid Kelly, Paul Kelly, Liam Carberry

     06/05/2009   Mortgage Activities                                    Haven Mortgages                    Rachel Doyle, Michael Leyden

     11/05/2009   Minimum Competency Requirements                        Financial Regulator                Diarmuid Kelly, Terry Hardiman, Elizabeth Smith

     14/05/2009   Forum on Life Insurance                                Forum                              Dominick McGrath, Diarmuid Kelly

     15/05/2009   Investec Review                                        Investec                           Dominick McGrath, Diarmuid Kelly

     19/05/2009   Mortgage Activities                                    Technology Company                 Rachel Doyle




30                                                           The Professional Insurance Broker
            First-class Protection from
            Friends First
            By Saragh Fitzpatrick, Income Protection Specialist, Friends First

No one doubts that the current market uncertainty brings
challenges for insurers and Brokers alike. Households across the
country have a decreased level of disposable income, and have
a need for security and value for money in all products and
services to which they commit their income.

In the current market, with the uncertainty surrounding
investment in equities, and the decreased disposable income in
households across the country, many people are turning to
protection rather than investments or savings.

We at Friends First recognise the need for you to provide a first     medical examination would previously have been required, we
class service for your clients at a competitive price, and have       will now be able to carry out the examination in the client’s
made selling our innovative and competitive Life and Income           home or place of work. This particular service is unique in the
Protection products even easier for you, the Broker. Our              Irish protection market.
objective is to respond to the changes in the competitive
                                                                      Income Protection
environment for both individual and group protection in the
most effective manner possible. We offer flexibility and value for    At Friends First, we have been market leaders in individually paid
money for our Brokers to give to their clients.                       Income Protection for many years, with more than 80% of the
                                                                      market. Throughout this time, we have concentrated on helping
Group Protection                                                      you, the Broker, to grow and develop this market. Over the last
As one of Ireland’s leading providers of Income Protection and        five years, the annual premium levels achieved by the Broker
Life Cover products, Friends First have been providing both large     market have grown more than fivefold, to over E13 million
and small companies with Group Protection solutions for many          annually. We are committed to further developing this market
years. Our Group Protection offering is based on the concept of       with your help, by providing you with innovative product
a simplified method of administration. At the core of this            developments and sales opportunities.
proposition is a straightforward method of acceptance of the
majority of cases at ordinary rates, with the number of members       At Friends First, we prefer to look at our Brokers as partners in
requiring underwriting kept to a minimum, through the use of          developing the protection market, and are committed to
Non Selection Limits, and a streamlined service allowed by our        providing opportunities to Brokers in this market development.
experience and expertise.                                             We look forward to working with all of our Brokers, both existing
                                                                      providers and new developing Brokers, in the future to grow and
Individual Protection                                                 develop this market.
Friends First are continually reviewing and updating our individual   We have a first class team on hand to provide assistance
protection offering. Since the start of May, you will have noticed    wherever you may need it, via marketing solutions, business
our more competitive rates, along with a range of unique              development solutions, or innovative product developments.
features, such as short applications for younger ages and
benefits of less than E320,000, rolling convertibility on our         For more information, and to discuss how Friends First can help
Convertible Term Assurance product, and our innovative new            you develop the opportunities in this market, please contact your
Nurse Medical Screening Service. In many cases where a                Account Executive.




                                       The Professional Insurance Broker                                                                   31