Blog articles

Friday, 20 June 2014

There is considerable excitement about ILS. It is likely to be a market transforming concept and may well bring additional strength and security to the mutual sector. It does not come without dangers and it is important to be aware of these and to take steps to avoid them.

ILS products have as their hallmark a freedom from solvency concerns. The risk of counter party insolvency and inability to perform under a contract is removed by security being provided. The automatic collateralised payment that occurs on the happening of a trigger event is not, however, a guarantee that ILS products are free from litigation risk.

...

Friday, 06 June 2014

“For me, strategic success is about staff recognising that this is a great place to work.”

This was one of my favourite comments made by the Chief Executive of an ICMIF member during a series of interviews conducted last year with a total of 34 CEOs from ICMIF member organizations (see the outcome of these interviews in ICMIF’s Chief Executive InSights: perspectives on leadership in the fastest growing insurance sector report)

I particularly liked it because while it may not be the most obvious way to describe strategic success, it accurately reflected the overall attitude of our CEO interviewees towards staff satisfaction,...

Friday, 23 May 2014

A common refrain is that insurance is not banking and doesn’t deserve to be treated in the same way. I am sure that many in the industry would agree with this statement, however, this is also the age of LIBOR, miss-selling and mistrust in all things financial, so separation is not that simple in fact it’s complicated. Not only do we have bank and insurance combinations but also there are mono-line and multi-line insurers. Moreover, there are distinctions in how businesses can raise capital and what their relationship is to their customers (policyholders). For all of the above reasons and many more besides, the context of good regulation...

Friday, 09 May 2014

In our post-global financial crisis world, greater capital adequacy has become the new rallying cry for regulators of financial institutions everywhere. Financial cooperatives have found themselves caught up in and, in some cases, caught out by this development. Unlike commercial companies, cooperatives cannot easily raise large amounts of fresh capital that qualifies as such in the eyes of the regulators, because paid-up capital contributed by members may be withdrawn once members decide to disassociate themselves from the cooperative. Without permanence and loss absorption ability, such funds cannot be counted as core capital.

...

Friday, 25 April 2014

uring the last month I have spoken to the Chief Executives of many ICMIF organizations and also a number of other financial services leaders and the key topic of conversation is invariably regulation. Or, should I say, the potential tsunami of regulation that appears to be coming our way. Many of these industry leaders view the situation as one of over-regulation, which is not only a burdensome cost, but also a drain on human resources. From the regulation industry side it seems to be a situation of carte-blanche to regulate everything that is slightly risky. The two sides are becoming more and more polarized.

When The Economist...

Thursday, 17 April 2014

Mutual insurers face increasing pricing pressure so must differentiate themselves to remain competitive, according to David Thomas, CEO of Market Services & Solutions at Willis.

Speaking in a video blog on WillisWire, he says: “Mutuals generally take a long-term view of their customers, so tend to create a stable product over a long period of time. As a result there are periods when mutuals’ pricing is considerably cheaper than the commercial market, and other periods when they are more expensive.

“At a time like this mutuals are faced with enormous pricing pressure. In this environment they must emphasize how they...

Wednesday, 09 April 2014

The Great Hanshin earthquake of 1995 was memorable for many reasons: it cruelly took nearly 6,500 lives and made history as Japan’s second largest earthquake of the 20th century. I also remember it as the front page story on the first ICMIF newsletter I ever read, when I began working at the Federation. The story told how the Japanese cooperatives had immediately undertaken extensive recovery operations, staff were sent to the affected areas and emergency payments were quickly made. It was an extraordinary and terrible catastrophe but one which was met with an urgent and very necessary response, which as I was to learn, is very typical of...

Wednesday, 09 April 2014

The transfer of reinsurance risk traditionally has been underpinned by deep personal and business relationships. This has been for a couple of reasons. First, the types of risk covered in reinsurance are unpredictable and the information for calculating potential losses is often sparse, providing an uncertain basis for contracts. As a result other mechanisms are developed to counteract uncertainty, such as building trust through long-term relationships; reinsurers trust that cedents will provide them with good information and cedents trust that reinsures will pay for losses and claims. So when we think about reinsurance relationships they...

Friday, 21 February 2014

Last week I attended a meeting of some of the leading players working in the field of resilience and disaster risk reduction. The meeting was organized by Willis and hosted by Rowan Douglas, CEO Capital, Science & Policy Practice at the Willis Group with other participants coming from the UN, the World Bank, the International Insurance Society (IIS) and the OECD. These invited delegates from the worlds of science, policy and capital met in London, UK, to push forward a combined agenda in the lead-up to key meetings on resilience and disaster risk reduction to be held at the end of June, 2014. This was a very timely meeting given the...

Thursday, 06 February 2014

For many reasons I was delighted with the recent news that The Co-operative Group, UK, is no longer selling their general insurance business.  Firstly, for the people working at The Co-operative Insurance it gives some stability after what must have been a very difficult time.  Secondly, it is great for the sector as The Co-operative Insurance was the original, first-ever, cooperative insurance business, established in 1867, a model that has since been copied in many countries around the world.  Thirdly, because CIS Insurance (as it used to be known) was one of the significant founders and supporters of ICMIF, with someone from CIS...

Pages