Posted on 21 May 2010
Joe Plumeri, Chairman and CEO of Willis Group Holdings, the global insurance broker, told an audience of insurance executives that the new UK Government must address the struggling economy to spur growth in the British insurance industry, while calling on the EU to resolve pending regulatory issues to bring greater certainty to the industry. Mr. Plumeri's comments were made yesterday before a capacity crowd of more than 800 delegates attending the British Insurance Brokers’ Association (BIBA) 2010 Conference and Exhibition at the ExCel Centre here.
Mr. Plumeri said the UK Government needs to act decisively to spur recovery and that the negative impact of the downturn on insurance is reflected in the quarterly results of both large and small brokerages. “Right now, our industry in the U.K. is hit by the double whammy of a persistent soft market and lagging economic activity. We’ve seen a dramatic slowing of the consolidation among smaller firms and downward pressure on the value of broking businesses.”
Mr. Plumeri, while lauding the consumer protection goals of Solvency II, questioned the impact of the proposed EU regulatory scheme on insurance captives, saying the regulatory requirements for EU insurance firms may not take into account “the fact that captives are fundamentally different from mainstream insurance companies and may not require Solvency II’s intended level of regulation.”
“The concern is that, rather than improving the system, Solvency II could make risk management more difficult for some companies,” Mr. Plumeri said.
Mr. Plumeri also pointed to the uncertainty surrounding the new Insurance Mediation Directive from Brussels, with changes impacting European brokers that could range from full transparency in compensation to the abolishment of commissions altogether in favor of client-paid fees, as is currently the practice in Scandinavia. “What our industry would most welcome is clarity and certainty,” Mr. Plumeri said.