Insurers and reinsurers must respond to new ethical standards and increasing levels of public scrutiny by “leaning-in” to politics and engaging in solutions with policy-makers, according to Huw Evans, Director General of the Association of British Insurers (ABI).
Speaking as part of a keynote address at Fitch Ratings’ Insurance Roadshow 2019 event in London, Evans claimed that “the frame of judgement for big business, including insurers, has altered for good.”
One major driver for this shift has been the ongoing social and political fallout from the 2008 financial crisis, which continues to be felt in the re/insurance industry through the stricter post-crash regulatory culture.
However, Evans argues that new customer expectations regarding issues such as the gender pay gap and climate change, as well as the values of the growing millennial consumer-base, are putting further scrutiny on the insurance sector.
“This scrutiny is partly driven by the financial crisis,” said Evans. “But it is also part of the wider pattern of western societies becoming less deferential to authority and traditional establishments, whether political, religious or commercial.”
“This is a long-term trend but it has been fuelled in recent years by the rise of social media, giving more power to consumers and bringing challenging news stories to the attention of the mainstream media more quickly.”
While every major sector of the economy must respond to these challenges and maintain a relationship with governments and policy-makers, re/insurers are uniquely placed due to how closely tied their products are to the full breadth of the public policy arena.
“Because our industry insures just about every form of commercial and human activity, we are exposed to a vast range of public policy from transport to environment, from civil justice to trade policy, from taxation to welfare rules,” Evans noted.
The ABI alone routinely deals with nine government departments, three devolved governments, four UK parliaments and decision-makers in the EU and US,” Evans said, adding that: “The relationship between Insurers and governments will always be symbiotic.”
He also suggested that we are in a period defined by increasingly interventionist government as focus is directed to systemic inequality, the losers of globalisation and those who feel economically or geographically remote from centres of prosperity.
“This is apparent throughout the Western world and the answers that may emerge could easily impact our sector both as risk managers and employers,” said Evans.
“As an industry, our best response to these challenges is invariably to ‘lean-in’ to politics, to explain our arguments and engage in solutions rather than to carp from the sidelines or engage in shrill vested interest lobbying,” he concluded.
