Insurance Ireland Consumer 360
Conference
Conduct Developments – Lessons from Europe
Hugh Hessing – Aviva Ireland CEO
7th December 2015
There’s been a tsunami of regulatory
change across Europe….
Consumer
Credit
Directive
2007
2010
2009
2012
2011
2014
2013
2016
2015
GDPR
…but what has been the real impact? Have
consumers benefited, do they understand?
Has all this reform achieved its intended outcome?
Gender Directive
Objectives
• Equal treatment for men and women in access and supply of goods and services
• Insurance in scope Dec 2012 (8yrs post enactment) following ECJ judgement
• Remove gender as a rating factor
Achievements:
 Consistent implementation across
markets
 General acceptance by consumers
 No significant drop in customer
numbers

Good
collaboration
implementation
between
on
all
Unforeseen consequences:
x Short term consequences – far larger
and more sustained spike in annuity
sales prior to implementation than
predicted
x
Unexpected opportunities for
companies to gain a competitive
advantage
3
Has all this reform achieved its intended outcome?
Retail Distribution Review (UK)
Objectives
• Clarity for consumers
• Address broker remuneration distorting consumer outcomes
• Increase professional standards
Achievements:
Unforeseen consequences:
 Better advice – not influenced by
commission
x Increase in execution only investment
 Advisers better qualified
 Allows comparison of the cost of
using Advisors
x Reduction in IFA numbers leading to
Advice Gap - those most needing advice
not receiving it
x No significant reduction in fees
x Plethora of confusing fee structures
4
Has all this reform achieved its intended outcome?
Anti Money Laundering
Objectives
• Combat money laundering
• Effective counter terrorist financing laws
• Support public interest in reducing access by terrorists/criminals to financial
instruments
Achievements:
Unforeseen consequences:
x Onerous, confusing and time
 Increased focus on compliance
consuming obligations
 Significant fines & prosecutions
x Loyal, long-standing customers
made to feel like criminals
 Greater awareness
x High cost of administration
increases cost for the consumer
x Inconsistency of application across
5
% who agree with statement
Despite all the new regulation, consumers still don’t
feel they understand Insurance Products
“I don’t really understand about pensions, savings policies and things like that*
35%
30%
25%
20%
15%
10%
5%
0%
Pre-recession (20052008)
In recession (2009-2011)
Post recession (20122015)
Ireland
UK
EU6
*IPSOS Aviva Consumer Attitudes Survey Qtr2 2015
6
% who trust insurance companies
And consumer trust in Insurance Companies is
lower than it was during the recession*
25
20
15
Pre-recession
(2005-2008)
10
In recession (2009
- 2011)
Post recession
(2012 - 2015)
5
0
Ireland
UK
EU6
*IPSOS Aviva Consumer Attitudes Survey Qtr2 2015
So what are the underlying system conditions driving
the wrong outcomes?
 Competing concurrent regulation
 Designing around the “1%”
 Regulatory design is not agile
 The industry of evidence
and
CUSTOMER NOT AT THE HEART??
What is our vision in Insurance?
Improve returns for policyholders and deliver value for shareholders
To become the preferred company for all our stakeholders
To help our customers achieve financial prosperity &
peace of mind
Help our customers understand and protect themselves from
risk
We free people from fear of uncertainty
What does “customer at the heart” look like?
To be earth’s most customer centric company
To put joy in kids’ hearts and a smile on parents’ faces
To create a better everyday life for the many people
10
What is needed to drive the change we need?
Industry
Culture
Oversight
Reinforcing
Continuous
Improvement
Outcomes &
Experience vs
Arms Length
Review
Innovation
Around
Evidencing
Continued & Improved Collaboration is Key