“Someone disappearing from the market place and overnight we get half a dozen phone calls saying please help, can you come and provide solutions to our clients” said Phil Storey, head of distribution for Investors Trust Assurance (ITA), a Cayman Islands regulated insurer.
Regulators are at the heart of the pullback by big insurers; both in the financial centre of the life companies, which for many is in the Isle of Man (IoM), and in the individual countries and regions in which they operate.
Across the world, the Insurance Core Principals (“ICP”) as promulgated by the International Association of Insurance Supervisors (“IAIS”), are making it clear that insurers must act within the existing regulations of individual countries, distribute via properly licensed intermediaries, be transparent on fees and charges and treat customers fairly.
For EU-based insurers the Solvency II Directive, which came into force on 1 January this year with its more risk-based approach to deploying capital, is also behind a drive to focus on core competencies and an increased pressure on business models.
“Regulation is driving the majority of the decisions by the IoM and other offshore players,” said Andy Robinson, an industry consultant and 15-year veteran of the life sector.
“It will mean that many insurers who have not done so before will seek to gain new licences where they can, including in places that have not been traditional offshore sales strongholds, like Japan,” he said.
“In the countries where it is not possible or economically viable to get a licence, then expatriates in those markets will be underserved by offshore companies,” he said.
The changes sweeping the industry coming more from new technology and the changing lifestyles of consumers are no less significant, according to many observers.
“The pace of change has never been faster,” said Brendan Dolan, regional director, Middle East and Africa, for Old Mutual International.
“We’re now reaching a tipping point with many providers, which will see more flexibility in savings products, more direct sales through the use of technology and a greater linkage between client investment strategies and risk profiles,” he said.
According to Robinson there is also a growing likelihood that more providers will start to look at web-based sales, especially in the protection arena which tends to be a bit more commoditised.
For ITA’s Phil Storey the current market volatility, at a time when many people are struggling to understand what they need to do to prepare for retirement, is requiring new solutions from insurers.
“We see the market changing and the big issue being that client’s needs are changing too. You need to be able to adapt and evolve, and to offer things that are different to what is out there today.”
