The British Insurance Brokers' Association (BIBA) is the UK 's leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers. BIBA membership includes 1,700 regulated firms. BIBA brokers handle around half the value of all UK home, contents, motor, travel, commercial and industrial insurance policies. Insurance brokers make a direct and indirect contribution of 1% to UK GDP.
BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues. BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards.
BIBA Conference 2017 – CEO Steve White Address
Good morning everyone and welcome to BIBA 2017 – Connections.
We give considerable thought each year to our conference theme.
Connections – it applies to all of us here today – whether that’s the business connections you make or renew around the conference exhibition, connecting with your customers and your customers’ growing interactions with connecting technologies, connected homes, appliances and vehicles.
For BIBA, connections brings to mind the lobbying we undertake on behalf of members and the relationships we build with politicians, civil servants and regulators and importantly, the way we, your trade body, connect with and remain relevant to our members.
And for the country at large, the theme clearly has a link to our long term connections with the European Union and the wider world after we Brexit.
So our theme should resonate with you all and our programme reflects these connections.
A big thank you at this time to our principal conference sponsor – Aviva.
Your support for this conference is gratefully received and helps ensure it remains the premier insurance event in Europe.
Our delegates today have come from far and wide.
I am pleased to welcome attendees from Belgium, China, Denmark, France, Germany, Gibraltar, Guernsey, Ireland, Isle of Man, Israel, Italy, Jersey, Luxembourg, Nigeria, Slovakia, South Africa, Spain, Switzerland and the USA.
Welcome to you all.
As my Chairman has just reminded us, this year marks the 40th anniversary of the formation of the British Insurance Brokers’ Association.
Had I stood on this stage back in May 1977, the world would have looked very different to the then 18 year old A level politics and chemistry student.
The UK had a Labour Prime Minister, Jim Callaghan, leading by then a minority government with the help of David Steel’s Liberal Party and the Lib-Lab pact.
The USA was in the early days of the Jimmy Carter presidency.
Union flags were everywhere as we prepared for the Queen’s Silver Jubilee.
Rod Stewart topped the charts with his double A-side I Don’t Want To Talk About It and The First Cut Is The Deepest but we students knew what was really going on – the Sex Pistols’ God Save The Queen was the most popular song of the month.
Things that we take for granted today we could not have imagined back in 1977 – mobile phones that fit in your pocket, the internet and emails, the little need for ready cash, cars that park themselves – the list goes on.
As we enter the fourth industrial revolution, new technologies are emerging enabling businesses and customers to deal with each other more swiftly and conveniently in a more connected world.
We won’t have to wait too long before developments like blockchain, chatbots, autonomous vehicles, artificial intelligence and other insurtech initiatives become common place in all brokers’ offices and not just on the agenda of insurer CEOs and industry conferences.
To help keep up with the pace of change, I announced earlier this year the creation of a new group with the working title the BIBA Innovation Station.
I’m delighted to be able to announce today that Vivek Banga from Arthur J Gallagher has agreed to chair this important new BIBA group.
We’re working with start-ups as well as incumbents on how we can help foster innovation in the industry.
Insurtech isn’t just the future; it is the now.
And there are plenty of examples.
Worry + Peace’s pouch, enabling insurance policies to be stored in the same place - A digital insurance wallet for all of your insurances.
Konsileo – addressing the operational challenges of regulatory compliance, data capture and duplication with an intuitive platform, freeing up brokers’ time.
Slice – on-demand insurance for the sharing economy
Insure Street – insurance in place of rental deposits, and rental vetting via an app.
Smart contracts that enable a travel insurance claim to be paid immediately a flight is cancelled, based on data sent to insurance providers by the airlines.
This isn’t a company, but an example of how Insurtech can improve customer interaction and strip out delays and unnecessary admin.
It doesn’t have to be shiny things like AI and robots – the R-Post registered email facility provided to members by BIBA is an example of how technology can help improve your business.
Insurtech enables you to stream-line your business processes, reduce administration and connect more effectively with your customers.
Why wouldn’t you engage with it?
Staying with our Connections theme, we are delighted to have attracted for you a truly world-class panel of digital thinkers for tomorrow’s keynote session – A connected world. What can we expect?
Jerome Pesenti, former Vice President, Watson Core Technology at IBM will share his expertise on artificial intelligence.
Anthony Townsend, Urban Planner and Senior Research Scientist at New York’s Rudin Center for Transportation Policy and Management, is a leading authority on planning for connected cities.
And who better to share their wisdom on the future of vehicle autonomy than Aric Dromi, Chief Futurologist at Volvo?
With a general election coming in 4 weeks time, our seminar session at mid-day today with broadcaster and journalist Steve Richards entitled Brexit, Trump and other political dramas looks unmissable!
I know where I am going to be at mid-day!
Now, who remembers this?
Those immortal words were spoken by the late Michael Fish during the forecast he delivered on BBC 1 on 15 October 1987.
Later that evening, the worst storm to hit South East England for three centuries caused record damage and killed 19 people.
Forecasting can be a tricky business; get it right and you’ve done your job.
Get it wrong and the consequences can be dire.
To use the same analogy in both political and economic terms, there are storm clouds on the horizon that we as the trade body for insurance brokers have a duty to be tracking.
Domestically, we have seen a sudden doubling of the rate of taxation of insurance products, from 6% to 12% in just over a year and a half.
This is unprecedented – between 1997 and 2015, a period of 18 years, there were only two rate rises, from 4% to 6%.
With the Chancellor indicating that more increases are possible, this remains a cause of concern for BIBA.
The recent changes to this tax rate will put pressure on brokers’ bottom line results.
As premiums increase, brokers’ commissions will be squeezed to try and keep prices competitive.
Additionally, those with significant insurance bills may choose to reduce their cover, or worse, forgo insurance all together.
We have also seen further increases in premiums because of a change to the way that catastrophic claims are calculated.
Due to the investment income that a large pay out would attract, insurers have, since 2001, received a discount of 2.5% on the level of catastrophic claim lump sum payments.
This is linked to the value of Government Gilt bonds – which hit an historic low in June last year.
In the face of a threat of Judicial Review, the Ministry of Justice has rushed through a review and implemented the changes.
At the end of February the MOJ announced a reduction in the rate, known as the discount rate, to minus 0.75%.
This was implemented in March of this year.
There is great concern within the insurer community of the cost – as a one-off hit, and the on-going costs of meeting claims.
This may disproportionately impact those groups who are above the mean for catastrophic accidents, such as young drivers.
Storm warnings are also coming out of Threadneedle Street.
In the last Inflationary report, the Bank of England has indicated they expect a jump in inflation to 2.7% during 2017 – above the central bank’s 2% target.
Factors included in the increase include a sharp devaluation of Sterling following the EU referendum, making imports to the UK more expensive.
Inflationary burdens add further costs – increasing pressure on insurance buyers’ budgets and brokers’ bottom line results.
Additionally the Governor, Mark Carney, has indicated concerns with an increase in consumer borrowing and a relaxation of lending criteria.
The FCA also recently reported that 3.3m people in the UK are perpetually in debt.
With consumer spending playing a significant part in the growth of the economy, either an increase in rates or a reduction in the availability of credit could see far-reaching consequences for growth in general.
Looking skywards over the English Channel, negotiations around our exit from the European Union and subsequent trade deal will be crucial for our sector for a number of reasons.
2,758 UK insurance intermediary firms have a passport to operate in the EU with £7.8bn of European revenues exchanged between us and the trading bloc.
Importantly, over 5,700 EU intermediaries have a passport to provide their services into the UK, so mutual market access is very important on both sides of the English Channel.
The UK is seen as a gateway to the European markets, particularly from the United States.
Any change to the ability to place business in a similar way could be profound, not only for the reputation of the UK as the capital of insurance in Europe, but also in terms of trading revenues.
Even if firms don’t trade directly with Europe, they are part of an economy that does.
Any change to the well-being of the economy is something that we have a direct interest in.
Similarly, firms are likely to use capacity that is passported in to the UK from the continent.
In January this year, the Prime Minister in her Lancaster House speech set out that she was seeking a “bold and ambitious Free Trade Agreement with the European Union”.
The outline of the plan she set out is compatible with what BIBA has been calling for; barrier-free, tariff-free access to Europe.
In lieu of membership of the Single Market, it is vital to firms of all sizes, that we have an arrangement in place that works for the industry.
We have been doing all we can in influencing the current Government and we will engage with the new Government after the election.
We also continue to work with our European peers in BIPAR to this effect.
The Government appears to have got the message and now needs to deliver on this in its negotiations with the EU.
That is no easy task however but now Article 50 has been triggered, “the phoney war has stopped” as one Minister told us recently, referencing the political posturing on both sides in the prelude to the negotiations.
It is essential that the Government succeeds in negotiations and delivers the promised ‘bold and ambitious Free Trade Agreement’.
Should an agreement not be struck and we default to World Trade Organisation rules, the situation could be disastrous for the UK insurance market, scuppering meaningful trade between us and continental Europe.
That said, it is also in the interests of the EU to strike a deal, particularly in light of recent developments in the United States.
Across the Atlantic, we have seen one of the biggest political shake-ups in living memory with Donald Trump riding a populist wave all the way to the White House.
The choppy waters do not end there however.
Trump comes with a reputation as being hard-nosed in his business dealings, evident in his assertion that Mexico will pay for the wall he’s planning to build on the border – based on the fact they have a trade deficit with the US.
In his inauguration speech, Trump could not have made it clearer where his priorities lie; “from now on it’s going to be America first, America first”.
If market commentators are to be believed, this promise of a protectionist economy could manifest itself in deregulation, lower banking capital requirements, lower corporation taxes, increased spending, tariffs on imported goods and services and higher interest rates.
The threat following Brexit may not come from Europe; it could be from over the Atlantic.
It is clear that any deal struck between the US and the UK will have to be first and foremost in the national interests of the United States.
This is precisely at a time when we as a nation need to be embracing globalisation more than ever.
The noises coming from the White House regarding striking a deal have been encouraging, but as ever, the devil will be in the detail.
It doesn’t take a meteorologist to see that we could be facing a perfect storm.
Cost pressures to the industry, economic factors pressuring budgets of insurance buyers, uncertainty and new competitive threats to the UK insurance market are all possible issues for the industry to deal with.
If several of these storms materialise and hit us at the same time, they could create significant challenges to the market and, importantly, to our members.
The UK has a trade deficit in goods, yet a trade surplus in services, of which financial services is the biggest component.
Ensuring that our industry succeeds is not just in the interests of BIBA and its members; it is also in the national interest.
BIBA is actively tracking each of these storms and we are engaged at all levels to help shape the landscape to take action where it is needed.
In that respect, it’s more important than ever to have a trade body doing this for the sector.
But its not all storms – there is plenty of sunshine to look forward to, as our keynote debate Planning for a post-Brexit future which follows on next will highlight.
Two years ago I stood on this stage and asked what have the Romans ever done for us, in my best John Cleese voice.
Since then we at BIBA have delivered an even broader suite of operational benefits.
Our exclusive member-only unrated insurer due diligence tool, the BIBA Litmus Test Report, launched late last year and is proving very popular with members.
The Litmus team can be found in the exhibition hall, they are hosting a fringe at 145pm tomorrow and I know they will be pleased to discuss the tool with you.
Around the same time we launched our new commercial combined scheme which significantly broadens the availability of flood cover for SMEs.
The scheme is run by Randall & Quilter, uses A rated paper and state of the art Landmark flood mapping technology.
R&Q are exhibiting so please go and say hello to them.
In response to members concerns about software houses and with the help of experts, we have created the BIBA Availability Framework.
Using industry recognised standards, we have created a framework to help our members undertake a level of due diligence on their outsourced IT providers that should satisfy the FCA, if they were to ask.
The framework and a list of those software houses that have been independently tested and found to meet the standards, is available exclusively to BIBA members via the password-protected section of the BIBA website.
We are launching today our third Insurance Act guide – our adaptation guide.
This has been put together following valued input from members and the seminar session tomorrow morning The Insurance Act – how has the market responded? What do brokers need to be aware of? should help put further meat on the bones.
Finally, BIBA’s Insurance Brokers’ Standards Committee, our IBSC, has been doing sterling work in helping to create our new online Good Practice Guide for brokers.
This Good Practice Guide will be an evolving body of guidance notes for members and new material will be added as we go along.
It already contains new guidance around the Law of Agency and helpful material regarding diversity and inclusion, which gives me the opportunity to remind you of tomorrow’s seminar session on embracing best practice in modern corporate governance.
On the theme of connections, we need to engage better with our public.
We know that as a profession we still don't look much like our customers, in terms of race, disability, or gender, and that makes it hard to speak the same language and make that connection.
We can't change that overnight, but we can make a start.
Could you make one change that would help raise awareness of gender equality, not just at work, but in the way you deal with your customers?
If so I'm asking you to back the CII’s Insuring Women’s Future’s HeForShe Campaign, like I and over 500 others from our industry have already done, and make a simple personal commitment.
Please go to the HeForShe stand in the exhibition Hall where you'll find more details and make your own personal commitment here today.
At a micro level, our lobbying activities are centred on the issues articulated in our annual manifesto.
The relevance of brokers and of BIBA has to be continually tested and this is why the themes in this year’s BIBA Manifesto are tailored to the issues that our members have told us are important to them.
This year’s manifesto, Enabling The Insurance Market, is our boldest yet and there is a copy on your seat.
The Manifesto covers 33 issues across 7 broad themes.
It contains 17 endorsements from high profile stakeholders, including 4 Ministers.
When lobbying, we keep in mind the words of Mick Jagger when he sings “You can’t always get what you want” but we engage with the enthusiasm of the Proclaimers when they sing about walking 500 miles.
A sense of realism is important when lobbying but rest assured that realism never turns to defeatism.
Some of our campaigning issues take time to bear fruit – take our call for claims management companies to be FCA regulated as an example.
When we first called for this, other stakeholders told us we would not win but, metaphorically, we walked 500 miles and 500 more.
Our case was well made, we were listened to and claims management companies will now become FCA regulated.
We have been calling for changes to be made to the Financial Services Compensation Scheme funding model for some time, due to the unfair way the model treats insurance brokers.
Brokers contribute 71% towards payments from our pot but are only responsible for 1% of the claims from the pot.
Our calls have been answered and the FCA has been consulting on possible changes to the model, none of which we or our members like.
Examples like this show that lobbying can sometimes be like herding cats, but herding is what we do, on behalf of brokers.
If resolving the issues around the compensation scheme is like herding cats, then I’m not sure there is a metaphor to describe the issues around exiting the EU.
In the Manifesto we call for tariff-free barrier-free access to the Single Market, a suitable transition period to prevent a cliff edge and regulatory reform, whilst highlighting issues on motor, travel and trade credit insurances.
The manifesto themes include:
Designing a market for tomorrow.
We are calling for a fair system of taxation and for no further increase in IPT for the duration of this Parliament.
As Parliament is now dissolved, I think we can claim a victory in this battle, but the war continues.
Telematics and calling here for an IPT break for young drivers who have fitted a telematics device
and insurtech where we call on Government and the regulator for assistance.
The second theme is Enabling access to the right insurance.
Here we highlight the benefits of using a broker with two powerful case studies.
We set out BIBA’s commitment to helping members of our armed services as we have recently signed the Armed Forces Covenant.
We call for an effective system of public financial guidance to replace the Money Advice Service and the potential role of BIBA’s Find-A-Broker service.
getting business interruption right
and finally in this section vulnerable customers and the joint BIBA and ABI voluntary code.
The third theme is Dealing with the threats –our new commercial combined scheme for SMEs that broadens the availability footprint of flood cover - and there are calls for action on both resilience and resistance to flood.
The changing nature of the terrorist threat
The insurance fraud taskforce and the provision of cyber insurance where we have 5 commitments.
Theme 4 is The highest professional standards of insurance broking
This looks at the work of BIBA’s Insurance Brokers’ Standards Committee and calls for the industry to work together to help raise standards and protect our reputation.
maintaining standards through education
and implementing the Insurance Act where we call for insurers to give greater clarity around key expectations and time frames for disclosable information.
The 5th theme is Supervision and regulation – for most brokers one of the biggest areas of change in recent times is the sheer weight of regulation.
I have recently met with Andrew Bailey and discussed the cost of regulation and the 70% increase in the costs for smaller firms over the last 3 years.
The FSCS funding model
The accumulation of regulation and our call for the FCA to stop writing new rules and focus on supervision.
The Enterprise Act and we are delighted that our call for the FCA to be on the business impact target list of regulators has been positively resolved.
and enabling customers to better understand their insurance by addressing the sheer weight of disclosures, a call supported by the chair of the FCA’s consumer panel Sue Lewis.
And Theme 6 is Safe and secure markets.
This picks up the launch of the BIBA Litmus Test Report and confidence in resilient broker IT systems and the BIBA Availability Framework.
So, a manifesto put together following the broadest engagement with members,
Containing issues that members tell us are important to them, which is well received by the politicians, stakeholders and members.
In the words of the Proclaimers
“When I’m working, I know I’m gonna be, I’m gonna be the man whose working hard for you”
Before finishing, some words of thanks.
BIBA is a membership body and any membership body is only as good as the quality and quantity of engagement it has with its members.
Member engagement with BIBA which is, after all, a not-for-profit organisation, is a little like unpaid volunteering.
So we as your trade association are very grateful to all those members who give their time and energy to the brokers’ cause.
To our board members, advisory board members, regional committee members, technical and other working groups and those that give us their time at our annual autumn tour of the regions, a very big thank you from me and my BIBA team.
Ladies and gentlemen, enjoy the conference!
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