ABI Update No 11 by wuxiangyu


									No. 11 July/August 2011

Focus One:                Focus Two:
Feedback from             What make our
the ABI Biennial          Boardrooms effective?
Conference                Ahead of this Autumn’s ABI
Rt Hon Dr Vince           non-executive directors
Cable MP addresses        seminar on Wednesday,
the conference of         28th September, this issue
500 delegates             focuses on what makes our
                          Boardrooms effective.


                                 Otto Thoresen                    500 delegates, 65 speakers, 23 commercial sponsors
                                                                  and 5 Government Ministers – the recent ABI Biennial
                                 Director General                 Conference was our largest and most ambitious event
                                                                  to date. It gave us the opportunity to talk about the range and
                                                                  impact of our industry, to discuss the scale and complexity of
                                                                  the regulatory changes we face and to stress the importance
                                                                  of redoubling our efforts for our customers. There is a feature
                                                                  looking back at some of the conference highlights inside for you
                                                                  to read.

                                                                  Since the conference we have had a media storm focused on
                                                                  referral fees paid following motor accidents. Rest assured, we
                                                                  are fully focused on getting total overhaul of the compensation
                                                                  system not just piecemeal changes. We did over 20 broadcast
      Rest assured, we are fully                                  interviews on the day the story broke, including the Today
focused on getting total overhaul of                              programme and BBC news, to stress that we have long called
the compensation system not just                                  for a ban on fees. But a ban will only work as part of a package
                                                                  of reform which also tackles fixed costs of legal fees, spiralling
piecemeal changes. We have met                                    personal injury claims and whiplash. The Jackson reforms must
with Ministers to press our case and                              be implemented in full if there is to be any positive benefit for
feel the momentum is with us on                                   customers. We have met with Ministers to press our case and
this issue with the Government.                                   feel the momentum is with us on this issue with Government.
                                                                  We will be hosting a series of events on this issue at each of the
                                                                  party conferences and will keep you updated.

                                                                  We are also undertaking an important piece of work to see how
                                                                  investors can ensure Boards are as effective as possible including
                                                                  by encouraging diversity and through effective evaluation.
                                                                  Following the financial crisis a lot of questions have been asked
                                                                  of shareholders and whether more could have been done to
                                                                  hold companies to account. Vince Cable announced further work
                                                                  in this area at our Biennial conference. You will be able to read
                                                                  more about this project inside this month’s Update.

                                                                  Please do keep in touch with your concerns or issues. I am very
                                                                  keen that we continue to work closely with our members and
                                                                  deliver on your behalf. Finally, if you have a holiday planned this
                                                                  summer, I hope you have an enjoyable and relaxing time!

                                                                  Otto Thoresen

   Viewpoint                   2011 Events        Recent events               News in Brief              UK Political Update

   International               Focus One          Focus Two                   New Staff                  Media
                               Feedback from      Effective Boards
                               the ABI Biennial
                               Conference 2011
                                                                                                     ABI UPDATE No.11 JULY /AUGUST 2011 3

2011 Events

ABI CEO Breakfast                                     As Chairman of the Office of Budget Responsibility, Robert Chote is one
                                                      of the most influential people shaping the future of the UK economy.
with Robert Chote,                                    He will be speaking at an ABI CEO speaker breakfast in September
Chairman of the                                       which will give members unique access to the man at the heart of the
Office of Budget                                      Government’s budgetary decision making. The OBR will publish its first
                                                      forecast evaluation report in the Autumn and Robert will be able to
Responsibility                                        give an overview of that report, which will be an indication of whether
                                     Robert Chote,
Thursday,                            Chairman of      the Government will meet its fiscal and economic projections and the
15 September                         the Office       policies which could make the difference. Robert will also talk about
                                     of Budget
                                                      the OBR’s recent Fiscal Sustainability Report. He will also discuss the
AB I                                 (OBR).           Coalition’s approach to reducing the deficit, and talk about the role
CEO                                                   insurers can play in the recovering economy. There will be plenty of
                                                      opportunity to ask questions.
                                    For further information on this event please contact Rodrigo.Steed@abi.org.uk or
In partnership with:                call 020 7216 7521.
                                    Venue: ABI 7th floor Conference Suite, 51 – 55 Gresham Street, London, EC2V 7HQ

ABI Non-Executive                   The Association of British Insurers will be hosting a seminar for Non-Executive Directors
                                    following on from last year’s highly successful ABI Investment Conference and the
Director Seminar                    2009 seminar for new non-executives. The aim of the seminar is to help facilitate a
Wednesday,                          better understanding between non-executive directors and institutional shareholders,
28 September                        and provide an introduction to the role and work of the ABI. The seminar will address a
                                    range of topics including:

                                    • Board Effectiveness and the role of diversity, including investor expectations for the future
                                    • Remuneration, including the official publication of the revised ABI remuneration guidance
                                    • IVIS Review of the last reporting season, including key issues and trends
                                    Representatives from ABI member and non member boards are welcome to attend.
                                    To register for the event, please visit www.abi.org.uk/nedseminar2011 or email
                                    ABIevents@abi.org.uk. For more information on the content of this seminar, please email

                                    Venue: ABI 7th floor Conference Suite, 51 – 55 Gresham Street, London, EC2V 7HQ

 ABI Financial                                                           The ABI’s ever-popular Financial Media Awards this
                                                                         year takes place on 3 November at the Grange
 Media Awards                                                            St Pauls Hotel. Now in its 16th year, the awards
 Thursday,                                                               celebrate excellence and achievement across
 3 November                                                              the range of financial services media, including
                                                                         national newspapers, broadcasters and trade.
                                                                         Winners of each of the 16 awards are voted for by
                                     FMA 2011 Host:   Entertainment
                                     Fiona Bruce,     for the evening:   the Heads of Communications and press offices
                                     presenter &      Tom Stade from     at ABI members. Around 400 representatives from
                                     broadcaster.     Michael McIntyre’s the financial services community and influential
                                                      Comedy Roadshow.
                                                                         financial media commentators are expected to
                                    attend the awards dinner. For details of sponsorship packages available
                                    and on how you can host a table at the awards dinner, contact: Malcolm Tarling at
                                    Malcolm.Tarling@abi.org.uk or Amanda Chase at Amanda.Chase@abi.org.uk.
                                    Venue: Grange St. Paul’s Hotel, 10 Godliman Street, London EC4V 5AJ.

2011 Events                           (continued)

   ABI Motor                                                                          From keeping young drivers safe on the roads to personal
                                                                                      injury compensation reform, motor insurance issues
   Conference                                                                         have dominated the media agenda in recent weeks
   Tuesday,                                                                           and continue to be issues at the top of every General
   22 November                                                                        Insurance in-tray. The ABI Motor conference has a great
                                                                                      line up of speakers, with Transport Secretary Philip
                                                                                      Hammond MP and Justice Minister Jonathan Djanogly MP
                                             Rt Hon Philip Hammond MP, Secretary
                                             of State for Transport and Jonathan      confirmed to share their views on Government motor
                                             Djanolgy MP, Parliamentary Under-        policy and compensation reform. It is a great opportunity
                                             Secretary of State, Ministry of Justice.
                                                                                      for members to hear from decision makers at the heart
                                            of Government, and to make their views known to the people who have responsibility for
                                            the policies that have an impact on the way member companies do business.

    In partnership with:
                                            To register for this event please visit www.abi.org.uk/abimotorconference2011
                                            For sponsorship and exhibitor opportunities at this conference, please email
                                            Amanda.Chase@abi.org.uk or call 020 7216 7485.
                                            Venue: Grange City Hotel, Coopers Row, London, EC3N 2BQ

   Additional events to the Autumn 2011 event schedule are continually added. For the latest
   information please visit www.abi.org.uk/abievents2011 or call 020 7216 7485

Recent Events
ABI’s Nominated Genetics Underwriters Seminar                            ABI’s Future Leaders Forum Session

 The ABI hosted the annual nominated genetics underwriters                The ABI held a Future Leaders session in Brussels in May
 seminar in July. The purpose of the event is to support the              where they heard from a variety of industry experts including
 role of the NGU (which is a central reference point within the           speakers from the Commission, the CBI in Brussels, the CEA
 company, responsible for each application in which a genetic             and Eversheds on the current and upcoming issues that will be
 test result is disclosed and provide updated information for             emanating from Brussels. The session concluded with a tour of
 the industry) and provide updated information to the industry.           the European Parliament.
 Speakers in attendance were from left Phil Cleverley, chief
 Underwriter from Scor, Jon Lambert, Vice President of Swiss
 Re, Dr Peter Dewis, Chair of the Genetics Committee and
 Customer Care Director from Unum and Nick Kirwan, the ABI’s
 Assistant Director, General Insurance and Health.
                                                                                                       ABI UPDATE No.11 JULY /AUGUST 2011 5

News In Brief

Compensation Culture
Nothing less than a full overhaul of the personal injury compensation system will fix the
problem, as referral fees hit the headlines.
                                             · Fixed fees and hourly rates paid to           However, the ABI is keeping in constant
                                              lawyers must be reduced accordingly in         dialogue with ministers and officials as
                                              order for a ban to have any benefit for        the Legal Aid, Sentencing and Punishment
                                              claimants and consumers, otherwise the         of Offenders Bill goes through the House
                                              referral fees are removed but the same         as this is the best opportunity available
                                              money is paid out.                             to get the changes that the industry
                                                                                             needs, in order for costs to customers
                                             · A ban must be implemented properly to
                                                                                             to be reduced.
                                              ensure that the problem does not emerge
Jack Straw added his voice to the             elsewhere. Insurers are far from being the
clamour for referral fees to be               only organisations which take these fees
banned last month, which pushed               and nothing less than a complete ban             As part of the ABI’s ongoing
motor insurance to the top of the             will work.
media’s agenda. The ABI has long                                                               campaign to ban referral fees
campaigned for a ban on the fees,            · Action is also needed to stamp down             and tackle the wider issue
which are paid by claims management           on fraudulent whiplash claims, which
                                                                                               of compensation culture,
companies to obtain details about             are at the heart of many fraudulent or
accidents. However, these payments are        exaggerated claims.                              meetings have been held with
a symptom of a dysfunctional system          The Government has given encouraging
                                                                                               MPs Jonathan Djanogly, Maria
which needs a complete overhaul. The ABI     signals that it will move to ban the fees         Eagle, Jonathan Evans, Julie
made this point very strongly in all media   with the Prime Minister answering a               Hilling and Andrew Slaughter.
interviews and has since had meetings        question to that effect during PMQs.
with ministers where three key points are
the focus of discussions:

Commission on Funding of Care
and Support
                  ABI Chairman, Tim Breedon spoke at                Among the recommendations in Fairer Care Funding are:
                  the high profile launch of Andrew
                                                                    · The capping of individuals’ lifetime contributions towards their
                  Dilnot’s report into long term care
                                                                      social care costs which are, at present, potentially unlimited.
                  funding, where he welcomed the work
                                                                      The Commission recommend a £35,000 cap after which
                  of the Commission on behalf of the
                                                                      individuals would be eligible for full state support.
                  industry. The Commission on Funding of
                  Care and Support recommended major                · The means-tested threshold, above which people are liable for
 Tim Breedon
 ABI Chairman     changes to how adult social care is funded          their full care costs, should be increased from £23,250 to £100,000.
                  in England. Tim Breedon said that industry        Tim Breedon welcomed “the strong recommendations that
would work with charities, health organisations and Government      Andrew Dilnot and his Commission team have provided today”.
to make this much needed change work.                               But he warned: “This is only the beginning. The report clearly
                                                                    shows that the government, private, public and voluntary sectors
     We need a clear and sustainable                                across the UK must take immediate action to ensure the challenges
framework so insurers can help to                                   of care funding are made a priority. We need a clear and
                                                                    sustainable framework so insurers can help to establish a
establish a functioning market, and                                 functioning market, and individuals and the state can work in
individuals and the state can work in                               partnership to determine an affordable and permanent solution
partnership to determine an affordable                              for the funding of long-term care.”
and permanent solution for the funding
of long-term care.

News In Brief
Volunteer drivers and motor insurance                                 Speedier life insurance claims
In May, Lord Hodgson launched his report ‘Unshackling
good neighbours’ which aims to reduce the burdens
on the voluntary sector. It includes a focus on the widely-
held belief that motor insurers require extra premiums from
volunteer drivers. The ABI has been trying to clarify the position.
We have found no insurer which reports routinely asking for
extra premiums from those who want to drive as part of their
voluntary work. We are working to tackle public confusion by
publicising current practices. But we are also looking for a more
long term solution to give certainty and clarity to volunteers
who want to offer their services as drivers.

     We are also looking for a more
long term solution to give certainty and                              Financial difficulties because of delays in paying life insurance
clarity to volunteers who want to offer                               can add to the worries of bereaved families. This is particularly
                                                                      the case for those on lower incomes who are less likely to have
their services as drivers.                                            other savings to see them through this difficult period.
                                                                      With the help of member companies, the ABI has developed
                                                                      guidance to help speed up payments of thousands of life
                                                                      insurance claims every year by cutting through the legal process.
Continuous Insurance Enforcement                                      Pilot schemes run by ABI members show it is possible to cut
(CIE) Launch                                                          the average time to make a payment from four months to four
                                                                      weeks. The guidance is on our website together with a Q&A and
A highly successful event to launch continuous insurance
                                                                      press release.
enforcement was hosted by the ABI in May. Attended
by nearly 60 guests including Roads Minister Mike Penning,
representatives from the media, insurance industry, police, DVLA,
BIBA and MIB, it drew attention to the new legal weapon to            Age Consultation Response
tackle uninsured drivers.                                             The ABI has responded to the Treasury’s consultation
It is now an offence to have a vehicle without insurance unless       on the proposed exception to the age discrimination
the DVLA has been notified that it is being kept off the road and     ban for financial services. We welcomed the Government’s
has a valid Statutory Off Road Notification (SORN). It means          recognition that motor and travel insurance is widely available
uninsured motorists no longer have to be caught driving to be         to all age groups and that, overall, customers benefit from
prosecuted. We will be keeping up the pressure for further action     age being used by insurers to calculate risk. We reaffirmed our
as it is our customers who ultimately have to meet the £500           commitment to publish data on the motor and travel markets to
million annual cost of uninsured driving.                             improve transparency, and to helping older people find the right
                                                                      cover through referrals and signposting.

                                                                           We welcomed the Government’s
                                                                      recognition that motor and travel
                                                                      insurance is widely available to all age
                                                                      groups and that, overall, customers
                                                                      benefit from age being used by insurers
                                                                      to calculate risk.
                                                                                                     ABI UPDATE No.11 JULY /AUGUST 2011 7

News In Brief

  The ABI’s General Insurance Committee has launched                fraudulent claims would otherwise end up being paid for by
  a new crackdown on fraud as it agreed to set up an                honest policyholders through higher premiums.
  Insurance Fraud Register and give £9m to fund a City
                                                                    “Fraudsters continually look for new ways to con insurers, so
  of London police unit dedicated to catching fraudsters.
                                                                    we are upping our game. Early next year we will be setting up
  Fraud costs the industry £2bn every year and adds around
                                                                    a national Insurance Fraud Register, which will contain details
  £44 to every premium paid by customers.
                                                                    of all known insurance cheats. And at the same time the first
  Nick Starling, Director of General Insurance and Health said:     ever national police insurance fraud investigation unit will
  “Insurers are working harder than ever to protect honest          begin its operations, making it harder than ever to commit
  customers against fraud. The savings made by weeding out          insurance fraud.”

Vocational Rehabilitation                                           With-Profits
Encouraging employers to invest in the health and well-             The ABI has responded strongly to the FSA’s initial
being of their staff has long been an aim of the ABI. So we         consultation on with-profits. We made clear our
are delighted that, after concerted lobbying, the Government’s      disagreement with many of the FSA’s proposals which we
Health Work & Wellbeing draft objectives now include the need       believe are based on a misunderstanding of the relationship
to provide incentives for employers to invest in occupational       between policyholders and with-profits fund. Our concern is
health, vocational rehabilitation and wellbeing services. We will   that some of the proposed new rules could reduce substantially
continue to press the Government to deliver on these objectives     the ability of with-profits funds to write new business. We will
as part of their welfare reform.                                    continue to lobby the FSA on these points. A further consultation
                                                                    on with-profits is expected towards the end of this year.

                                                                        Our concern is that some of the
                                                                    proposed new rules could reduce
                                                                    substantially the ability of with-profits
                                                                    funds to write new business.

Bribery Act
The Bribery Act, which replaces and clarifies legislation
dating back from the Boer War, came into force on July 1.
The ABI fully engaged with the consultation process and
contributed to guidance for firms published by the Ministry of
Justice. The Act includes a new offence which can be committed
by commercial organisations rather than just individuals for the
first time. It is, however, a full defence for an organisation to
prove that it had proper procedures in place to prevent persons
associated with it from offering bribes. It is important that
members assess this risk and take the right steps so they can
be protected.

News In Brief                            (continued)

UK Financial Architecture and                                         Taxation
Consumer regulation                                                   A consultation document on reforms to the rules on Controlled
The regulatory overhaul which will see the end of the FSA             Foreign Companies (CFC) has been published by the Government.
and insurers regulated by a combination of the Prudential             The aim is to modernise the rules, which are often given as to
Regulatory Authority and Financial Conduct Authority is of            why companies relocate elsewhere, to reflect how businesses
crucial importance to the industry.                                   operate in a globalised world. We welcome the intention but the
                                                                      document outlines a number of issues and proposals which we
The ABI continues to call for more detail about how the two           will need to consider in detail. In particular, we need to make sure
bodies will work together, and how both of them will interact with    for insurers that they do not damage the Government’s ambition
Europe which as many members know is increasingly where the           to give the UK the most competitive tax regime in the G20. The
rule changes are coming from.                                         ABI and its members continue to participate fully in consultation
There have been some encouraging signs, not least the move to         around Solvency II tax issues for both life and general insurance.
have a Statutory Objective for insurance included in the work of      We are preparing a comprehensive response to the HMRC
the PRA, but some of the rhetoric around the work of the FCA          Consultation Document on life insurance. We are also gathering
raises real cause for concern around how much oversight the           data on general insurance volatility and tax issues.
regulator is expecting to have and how practical that will be.
The ABI will be providing a briefing to the Parliamentary
Committee which has oversight of the Bill bringing these changes
                                                                           The ABI and its members
into law and will keep in constant contact with members on this       continue to participate fully in
important issue.                                                      consultation around Solvency II
                                                                      tax issues for both life and general
Supreme Court hearing on plaques                                      insurance.
The Supreme Court held a three day hearing in June of
the judicial review of the Damages (Asbestos Related
Conditions) (Scotland) Act. A seven judge panel heard
submissions from insurers and Scottish and Welsh Government
officials. We do not expect the judgment to be delivered
before September.

  Motor – Young drivers
                                                                      the potential role of telematics in making young drivers safer
                                                                      on the roads. The meetings are encouraging as they reveal the
                                                                      Government’s determination to address this issue despite the lack
                                                                      of proposals in the recent Road Safety Strategy. We also welcome
                                                                      the recognition that this is an issue which is more to do with
                                                                      young driver safety than the cost of insurance.

                                                                       Latest Update:

                                                                       At the ABI Motor Conference to take place on the
                                                                       Tuesday, 22 November, one of the breakout sessions
                                                                       will cover the potential role of telematics. For those
  The Department for Transport held two seminars in                    interested in attending this session, please visit www.
  June on young drivers including one chaired by Transport             abi.org.uk/motorconference2011. The name of the
  Minister Mike Penning. They explored the serious issues              breakout session is Vehicles of the future – challenges
  around young driver safety, including the need for more rigorous     and change.
  testing and training, post-test qualification and the standard of
  driving instructors. It was also a chance for a discussion on
                                                                                                         ABI UPDATE No.11 JULY /AUGUST 2011 9

News In Brief                            (continued)

Missing People                                                        Solvency II
Evidence was given by the ABI to the inquiry being held by            There is growing momentum around the proposal to split,
the All Party Parliamentary Group on missing people. The              in some way, the preparation and implementation dates
inquiry, into the plight of families when loved ones go missing has   for Solvency II. This has received a mixed response in the UK;
attracted considerable publicity following the evidence given by      given the industry has done so much to prepare to meet the
Kate McCann. We were able to show that insurers treat missing         original deadlines. This debate and the technical specification for
persons cases with sensitivity and discretion. The ABI has offered    the Level 2 rules will run through the summer. The ABI has made
to work with the charity Missing People and other agencies to         its views clear that firms should not be penalised for their efforts
prepare guidance for insurers about how they can handle these         to meet the original schedule.
painful cases as sensitively as possible.

                                                                      Customers vs. Shareholders – are they
                                                                      compatible? Second Future Leaders
                                                                      Forum held
                                                                      ABI’s Future Leaders Forum partners, Eversheds, hosted
                                                                      the second session of the year on 13 July. The theme for
                                                                      the day was “Customers vs. Shareholders – are their needs
                                                                      compatible?” Members of the forum had to assess these
                                                                      two stakeholders for any alignment. Speakers included Jo
                                                                      Thornhill from The Mail on Sunday, Matt Gilham from Esure
                                                                      and Ian Naismith from Scottish Widows covering topics such
                                                                      as the importance of our industry’s reputation, fraud and
                                                                      auto-enrolment respectively. The case for shareholders was
                                                                      presented by Marc Jobling of the ABI, who spoke about the role
Consumer Insurance (Disclosure and                                    of institutional investors, and Neil Sharman from Brit and Matt
Representations) Bill                                                 Goodwin from Catlin, who focussed on domiciliation. Eversheds
                                                                      experts provided the group with an introduction to asset
Peers gave a second reading to The Consumer Insurance                 management and the new Bribery Act. The day concluded with
(Disclosure and Representations) Bill. We support the                 a group debate covering issues such as diversity on Boards and
general thrust of the Bill, which gives legal status to existing      the effect of team moves in break-out sessions. Over 50 Future
industry good practice. Working with the Law Commission, we           Leaders made up of representatives from the ABI’s key members
have been able to persuade the Treasury to clarify an important       attended the day which ended with a summer drinks reception.
aspect of the Bill about the information that an insurer ought to
know in determining whether the customer has acted honestly
and reasonably. We will closely monitor the progress of this fast
track Bill through Parliament.

                                                                       Eversheds LLP, the sponsor of the 2011 Future Leaders
                                                                       Programme hosted a Forum covering a range of topics. These
                                                                       included the detection and elimination of Fraud, New Markets
                                                                       – Pension and Auto-Enrolment and Managing company assets
                                                                       (the importance of fund management), the latter presented
                                                                       by Michael Wainwright, a Partner at the law firm. Standing
                                                                       with Michael are Future Leader representatives Vicki Harrison,
                                                                       Director of Finance & External Growth from Coface and John
                                                                       Power, Strategic Planning Director from Metlife.

UK Political Noticeboard

              ABI’s Summer Parliamentary
              The ABI held a well attended Parliamentary Recep
              at the House of Commons on 13 July. Chris Leslie
              MP, Shadow Financial Secretary, delivered a speec
              which acknowledged    the importance of insurers. Otto
              Thoresen’s speech focused on the importance of
              work with Parliamentarians and the industry’s effort
              to ensure products are affordable  for people. Despite
              the high profile statement from the Prime Minister                                                              er
                                                                          The ABI enjoyed an extremely well attended summ
               and BskyB debate, the reception attracted over 80          parlia mentary reception on 13 July despite two
               members, key MPs and Lords. David Blunkett, Louise         high profile voting sessions taking place on the day.
               Elman, Jonathan Evans, Laurence Robertson, Nick            Standing with the Shadow Financial Secretary and
                                      Lord Sheikh were among the                                                             ral
               Bois, Lord Sassoon and                                     guest speaker Chris Leslie MP is ABI Director Gene
               MPs and Lords present.                                     Otto Thoresen and Chairman Tim Breedon.

                                                                          MP Meetings
                                                                          • As part of the ABI’s ongoing campaign to ban referral fees and
                                                                             tackle the wider issue of compensation culture, meetings have
                                                                             been held with Jonathan Djanogly, Maria Eagle, Jonathan Evans,
                                                                             Julie Hilling and Andrew Slaughter.
             Other Legislation
                                                                          • Otto Thoresen met with Danny Alexander, Chief Secretary to
             • The Pensions Bill is now in the
                                               Committee Stage in            the Treasury to discuss the challenges of an ageing population
               the House of Commons and the
                                                   Consumer Insurance        on HMT’s planning, engagement with Europe and unlocking the
               Bill is in the Committee Stage in                              industry’s investment potential.
                                                   the House of Lords,
               with briefings sent out at each
                                                stage.                     • Nick Starling attended two round table discussions on
            • The Welfare Reform Bill will hav
                                               e its Second Reading           long term care with Danny Alexander MP and Paul Burstow,
              in the House of Lords on the 13t                                Care Services Minister.
                                                  h September.
              The ABI has sent out briefing ahe
                                                  ad of this debate.       • Fabrice Desnos, Chair of the ABI Trade Credit Committee and
               The Government has published
                                                 the draft Financial           Nick Starling, met Lord Green, the Minister for Trade and
              Services Bill outlining proposed
                                               reforms to the UK               Investment to discuss how trade credit insurers can support SME
             financial regulatory regime. The
                                                draft Bill will go             export markets, which are a priority for the government’s plans
             through pre – legislative scrutiny                                for growth and recovery.
                                                  by a Joint
             Scrutiny Committee, formed of
                                               MPs and Peers,               • Nick Starling met with Roger Gale to discuss issues of
             the Committee will report back
                                               in early December.              transparency within insurance products.
            The Bill will then enter Parliam
            a short briefing to the members
                                             ent. The ABI has sent          • The ABI held a briefing session with Shadow Financial Secretary,
                                               of the Committee                 Chris Leslie MP, on the forthcoming financial service reforms.
            highlighting our key concerns with
                                                   the draft Bill and
            will be responding to the Committ
                                                ee’s call for evidence.
                                                                                                     ABI UPDATE No.11 JULY /AUGUST 2011 11

UK Political Noticeboard International

   Legal Aid, Sentencing and
   Punishment of Offenders Bill
   The Bill is now in Committee Stage in the House
   of Commons. Nick Starling gave evidence to the
   Committee on the 14th July and raised three key
   points on reform to the compensation system:
                                                                     Test Achats Ruling
   • Fixed fees and hourly rates must be reduced                     It is good news that the UK Government has said that it
      accordingly in order for a ban on referral fees to have
      any benefit for claimants and consumers;
                                                                     believes that the Test Achats ruling does not apply to existing
                                                         that        policies. Given the nature and scale of uncertainties that have
   • A ban must be implemented properly to ensure
      the problem doesn’t emerge elsewhere;                          arisen from the ECJ ruling banning the use of gender in pricing,
                                                            sh       the ABI was pleased that months of hard work with HMT officials
    • A ban is necessary to stamp down on fraudulent whipla
      claims, which  are becoming increasingly problematic .         resulted in the Government’s swift action in issuing a ministerial
                                                                     statement. The clarification that the ruling would only apply to
                                                                     new policies concluded after 21 December 2012, is good news
                                                                     for the both industry and the consumer, who could have been
                                                                     adversely affected if the ruling had been applied retrospectively.
                                                                     We were also pleased that the Government outlined the steps
                                                                     they would take to secure legal certainty and gain a consistent
                                                                     approach in all European Member States.

                                                                     OTC Derivatives Regulation
                                                                     We have seen good progress in the negotiations on the OTC
 Cost of Insurance                                                   Derivatives (EMIR) Regulation this month. The Economic
                                                     cost of         and Monetary Affairs (ECON) committee of the European
 On Tuesday 5 July the ABI hosted a successful
                                                               to    Parliament agreed on amendments which are very sympathetic
 insurance even   t in the House of Commons to allow MPs
 raise any concerns they may have. The       event was hosted        to the needs of long-term savings institutions. These include
                                                   chaired the
 by Rt Hon Jack Straw MP. Mark Garnier MP                            recognising the need to allow non-cash collateral for margin
 discussion. The pane    l consisted of Nick Starling, Tom           and clarifying that any transitional arrangements required to
                                                 Topics covered
  Woolgrove, RBS and Karl Helgesen, Zurich.                          achieve this must encompass retirement products that go beyond
                                                 t what happens
  during the session included concerns abou                          just IORP (Institutions for Occupational Retirement Provision).
                                                     ct of banning
  to flood risk homes after 2013, what the impa                      Amendments also give investors the choice to use full segregation
  referral fees could be   on small solicitors and claims
                                                 afford insurance.   of assets with clearing members/CCP’s or otherwise. These changes
  companies and that young drivers cannot
  It was a good, open discussion.                                    have since been endorsed by the Parliament as a whole. There is
                                                                     still much work to be done, particularly as negotiations remain
                                                                     fraught among the member states in the Council of Ministers, but
                                                                     this offers an excellent platform for future progress.

                                                                     Autumn Proposals
                                                                     It is also now clear that we will all have to wait even longer
                                                                     for a series of long anticipated proposals from the European
                                                                     Commission. Crisis resolution for banks, Capital Requirements
                                                                     Directive (CRDIV), MiFID2, Market Abuse Directive Review are
                                                                     all planned for the autumn. PRIPS, IMD2, UCITS V are similarly
                                                                     delayed, and now expected to be proposed early next year as a
                                                                     “Retail Package”.

Focus ABI Biennial Conference – Feedback from
the 22 June event

 In one of the keynote speeches of the day Tim Breedon, Chairman of the ABI spoke on how the insurance industry could work more closely with government.
 He also called on the Treasury and the FSA to continue to support the industry in striving for a regulatory system which is fair, proportionate, workable, and stable.

The fifth ABI Biennial Conference was held on 22 June 2011 at the Riverbank Park Plaza.
This was the largest event the ABI has organised. Over 500 delegates attended to hear 65
speakers and we were supported by 23 sponsors.
                                                                                       Conclusions from the political session included agreement that
                                                                                       politicians and industry must work together to make regulation
                                                                                       work. Getting the relationship right with EU institutions is
                                                                                       critically important. There was broad agreement that the industry
                                                                                       was not part of the financial crisis but that it can be part of the
                                                                                       solution. It needs to become more assertive about its value and be
                                                                                       subject to greater stability in regulatory and tax structures. Finally,
                                                                                       it was highlighted that the industry has a role to play facing the
                                                                                       changing demographics of the UK, especially in areas such as
                                                                                       Long Term Care.

 Conference delegates heard Business Secretary Vince Cable announce the                                                            The consumer session
 launch of an independent review of investment in UK Equity markets,                                                               demonstrated a real
 changes to company reporting and proposals for tougher provisions on                                                              appetite among members
 disclosure of executive pay and its link to company performance. He urged
 the industry to work with the Government to ensure the long term success                                                          to work hard to improve
 of the UK’s companies.                                                                                                            the public perception of
                                                                                                                                   our industry, to stress
Keynote speeches from Liam Byrne, Tim Breedon, Vince Cable
                                                                                                                                   how much we do which
and Hector Sants gave delegates a lot to think about. This was
                                                                                                                                   is socially essential and to
reflected in the questions and comments raised on the day. In a
                                                                                                                                   make more of the positive
break from the tried and tested format for ABI conferences, delegates
                                                                                                                                   contributions we make to
had the opportunity to submit questions and comments
                                                                                                                                   people’s lives. To help to
throughout the day via a netbook rather than raising their hand.
                                                                                        Co-chairing the event with Anthony         achieve this, the following
These were then fed through to the conference chair Mishal                              Hilton, Mishal Husain provided much        conclusions were drawn:
Husain who shared them with the audience. Feedback from                                 welcomed interactivity with the audience
                                                                                        and speakers. Delegates were encouraged The industry needs to act
delegates was extremely positive about this aspect of the event,                        to send comments and ask questions         earlier to tackle potential
particularly as some of the comments could be anonymous which                           via the format of electronic netbooks
meant people could really speak their mind.                                             ensuring real time opinions from everyone. mis-selling activities; it
                                                                                                                                   needs to recognise that the
There were good, challenging panel sessions on the political                           performance of the poorest firms affects the industry’s reputation
environment for insurers and how the industry can improve its                          as a whole and as an industry, we need to get better at telling the
reputation. Both sessions generated lively debate on ways forward                      ‘good stories’ and describing the benefits that we provide to society.
for the industry.
                                                                                                                      ABI UPDATE No.11 JULY /AUGUST 2011 13

Focus ABI Biennial Conference – Feedback from
the 22 June event                                            (continued)

To ensure customers chose the correct product, we need to help                                                           The breakout sessions
educate them that the cheapest product may not be the best for                                                           were designed to appeal
their needs and to make sure they understand what they are buying.                                                       to all our members. Issues
                                                                                                                         covered included Flooding,
                                                                                                                         Long Term Care, Regulation,
                                                                                                                         Protection, Taxation, Savings,
                                                                                                                         Remuneration Regulation,
                                                                                                                         Fraud and the impact of
                                                                                                                         Test Achats.

                                                                                                                         Feedback across the board
                                                                                                                         has been very positive. We
                                                                                   Danny Alexander MP, Chief Secretary
                                                                                   to the Treasury was the guest speaker
                                                                                                                         received a great deal of
In his first major speech since becoming Director General of the ABI,              at the ABI Biennial Dinner held the   press coverage during the
Otto Thoresen said the insurance industry needed to improve its reputation         night prior to the conference. ABI    event including The Today
if it was to help UK consumers manage their finances. Engaging with the            Board members, conference speakers
industry’s customers is to be one of his key priorities as DG. He outlined         and sponsors were in attendance       Programme, Five Live’s Wake
how he would proceed by explaining it in a ten point plan. Details of              totalling over 100 guests.            up to Money, The Financial
which can be found on the ABI’s biennial conference webpage at                                                           Times and Evening Standard
                                                                                  which gave us the opportunity to talk about our priorities and
                                                                                  the industry’s importance.
We had surveyed a random sample of executives from member
companies, and over 2000 consumers, which gave us good talking
                                                                                  For write ups on all the plenary and breakout sessions please visit
points on the day. A key focus of Otto Thoresen’s speech was that
executives believe that the industry still needs to work hard at
improving its reputation, despite the many ways we help people
                                                                                  If you would still like to provide feedback on the event please visit
live their lives.

    Rt Hon Liam Byrne MP, Shadow Work and                Hector Sants, Chief Executive, FSA               Nick Robinson, BBC Political Editor
    Pensions Secretary and Head of Labour
    Policy Review

Focus ABI Biennial Conference – Feedback from
the 22 June event

 Mark Hoban MP, Financial Secretary to the Treasury, Chris Leslie MP, Shadow Financial Secretary, Clement B Booth, Chairman, Allianz UK &
 Member of the Board of Management, Allianz SE contributed to the morning’s plenary session panel on the political environment for insurers in
 the UK and EU.

 Steve Webb MP, Minister of State for Pensions, a panel speaker at the     Rt Hon Jack Straw MP and David Neave, Director of General Insurance,
 session on 2012: Will the UK start saving again?, one of nine breakouts   Co-operative Insurance, panel speakers at the breakout session on
 which delegates could choose to attend.                                   tackling fraud.

 Carlos Montalvo Rebuelta, Executive Director, EIOPA was one of            Floods Minister, Richard Benyon MP, answers the session’s title question
 the five Regulation breakout session speakers talking on how UK           of What will happen after 2013 when the Statement of Principles
 regulators and the industry will cope with the move to twin peaks         expires. The need for shared responsibility between Government insurers
 and manage the increasing shift to EU policy making.                      and consumers was discussed in order to develop a model for the future
                                                                           of flood cover.
                                                                                                      ABI UPDATE No.11 JULY /AUGUST 2011 15

Focus Effective Boards

     The effectiveness of                                           But the financial crisis, and the serious failures of oversight
                                                                    and governance which led to it, means the issue is now
     company boards has long                                        high on the wider political and public agenda.

     been a key question for                                        At European level, this concern has already led to two green
                                                                    papers on improving governance from the Commission. In the
     shareholders. Indeed,                                          UK, we have seen a more intrusive approach
                                                                    to the approved persons’ regime by the FSA and revision of the
     one of the main roles                                          Governance Code to focus on board effectiveness.

     of the ABI’s Investment                                        These steps have been coupled with an increased focus on
                                                                    board diversity. For one of the initial conclusions drawn from
     Committee members is                                           the failures which led to the crisis was that too many boards

     to assess the quality of                                       became subject to group-think, in part because members
                                                                    were often very similar in terms of background, experience and
     the management and                                             skills. A clear example of this lack of diversity is the fact that
                                                                    women make up only 12.5 per cent of board members
     the non-executives of                                          in FTSE-100 companies.

     companies with which
     they are involved.

                       The male              had in broadening the make-up of its           The research will look at company
                       dominance of          senior team by engaging with companies         reporting since the start of the year,
                       boards, and how       and monitoring change.                         benchmarking the level and quality
                       they can be made                                                     of disclosure. Our aim is to publish a
                       more diverse, is      Lord Davies’s report was welcomed by ABI       report in September which will highlight
                       an issue that the     members. They echoed his view of the           areas of existing good practice to
                       EU and the UK         crucial importance of effective boards and     encourage and help all companies to
 Lord Davies, former
                       government have       the role which diversity, in all its forms,    raise their game. The report will also set
 Minister of State for                       can play in helping achieve this.
 Trade Promotion and   begun to consider.                                                   out the expectations of the investment
 Investment.           Gender diversity                                                     community on these important issues.
                                               As part of the response, members have
                       was raised in the
                                               commissioned the ABI Secretariat to
EU’s recent Green Paper on governance
                                               research the record and ambitions of            Latest Update:
while the Government last year
                                               companies in the areas of:
commissioned Lord Davies to conduct a
                                                                                               The ABI will release the publication
review entitled “Women on boards”.             • Ensuring Board Effectiveness                  of the ABI’s research project on
His report, delivered early in 2011,           • Diversity                                     board effectiveness and diversity
found that the evidence strongly suggests      • Board Evaluation                              at a Non-Executive Director
that boards perform better when they           • Succession Planning                           Seminar on Wednesday, 28
include the best people with a range of                                                        September 2011. Included in the
perspectives and backgrounds.                The study deliberately goes beyond                report are details of what investors
                                             simple gender diversity to look as well at        will be expecting from companies
He said the low numbers of women on          broader governance issues. Our experience         in these key areas in the future. For
boards was a matter for concern but          suggests that practices such as good              more details and to book, please
rejected calls for the UK to follow other    board evaluation and sound succession             email ABIevents@abi.org.uk or visit
European countries in imposing a quota       planning are also key to ensuring an              www.abi.org.uk/nedseminar2011
for female representation. His report also   effective board.
stressed the critical role that investors

New Staff

Below are some of the new faces who have joined the ABI recently, whom you may have dealings with.

               Chris Charman                            Katrina Dixon                                             Martin Fox
               Consultant                               Policy Adviser                                            Secondee from BLM
               Research Directorate & Director          Regulation                                                Property, Motor & Liability
               of ORIC                                  Investment Affairs                                        General Insurance & Health

               Pamela Gachara                           Kate Gray                                                 Joel Lewis
               Intern                                   Assistant Financial Controller                            Policy Adviser
               Investment Affairs                       Finance & Facilities,                                     Financial Regulation & Taxation
                                                        Corporate Affairs

               Edward Nugent                            Katherine Riviere                                         Jennifer Wills
               Team Support                             Assistant Communications Officer                          Policy Adviser
               Property, Motor & Liability              Corporate Affairs                                         Conduct Regulation in Life &
               General Insurance & Health                                                                         Savings

News Watch                                                    82 Media responses including:
ABI mentions in print for May, June and July                  · Otto Thoresen speaking on the Today Programme on the
                                                                CEO Survey.

                                                              · Nick Starling appearing on Channel 4 News Live on Referral Fees.

                                                              · Malcolm Tarling speaking on Radio Ulster on Travel Insurance.

                                                              · Nick Starling quoted in the Daily Mail on Police cashing in on
                                                                car crashes.

                                                              · Nick Starling appearing on BBC Panorama on Motor Premiums.

                                                              · Malcolm Tarling was interviewed on ITV Daybreak and BBC news
                                                                channel on the rise in insurance frauds detected, as was Nick
                                                                Starling on Radio 5.
    The Financial Times
    The Times/Sunday Times                                       Tell us what you think
    The Daily Telegraph/                                         If you would like to comment on any of the information provided in this newsletter
                                                                 please email abiupdate@abi.org.uk
    Sunday Telegraph
                                                                 Follow us on
    Daily Mail/Mail on Sunday                                    www.twitter.com/britishinsurers

                                                              For more information, contact:
Total broadcast interviews in May,
                                                              Association of British Insurers, 51 Gresham Street, London EC2V 7HQ
June and July: 56                                             020 7600 3333 www.abi.org.uk

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