31 posts categorized "Insurance"
2015 has the potential to be a turning point in terms of the post-crisis re-regulatory agenda, when the focus shifts from repairing balance sheets and reputations to the role of financial services in promoting jobs and growth. And indeed from proposing new rules to implementing the multitude that has been agreed over that last few years. Deloitte’s EMEA Centre for Regulatory Strategy have identified what we believe to be the ten key areas of regulatory focus for financial markets in 2015.
We have recently launched the summer instalment of the Deloitte Real Estate London Office Crane Survey. This is our flagship report (released bi-annually) which has been monitoring office construction activity in Central London for almost twenty years. The level of construction is widely used as a measure of economic activity - counting the number of cranes / construction sites across Central London is a relatively easy and accurate way to benchmark London’s economic health.
Conduct risk is one of the biggest regulatory challenges for firms operating in wholesale insurance markets, especially the Lloyd’s and London market. That was the clear consensus from panellists and delegates attending the Insurance breakout session of Deloitte’s Conduct Risk Roadshow, which I had the pleasure of introducing on 4 April 2014.
In the interests of sharing the knowledge from the room, in this article I highlight a selection of the key points from our discussion, including insights from our panellists: Sean McGovern (Director of Risk Management and General Counsel at Lloyd’s of London), Carol Richmond (CRO at AON), David Hough (CEO at LIIBA) and Mark McIlquham (General Insurance Regulation Partner at Deloitte).
A perfect storm is in full swing in the Life and Pensions sector – and, gladly, I don’t mean this winter’s extreme weather.
This storm is virtual (literally), formed over the last couple of years by the regulator changing the rules of the game (RDR, Pension Reform), individuals increasingly expecting new ways of engaging with financial institutions and technology advancements making it all possible. The timing is perfect as the UK economy gathers momentum, putting growth firmly on the corporate agenda.
Educated over a number of years by the banks to do their banking online, consumers in the UK have seen further empowerment in the last couple of years. The range of financial interactions online is growing, with platforms supporting do-it-yourself and advised savings and investments; and offering online services almost certainly means via smartphone and tablet as well as a PC.
It is now several years since the scope of Mobile Device Management (MDM) expanded to become EMM and Bring Your Own Computer (BYOC) morphed into Bring Your Own Device (BYOD). As mobile management technologies enable even wider and better risk management, the consumerisation of IT is pulling the organisational risk profile in the opposite direction. So should organisations approach mobile technology choices with risk and controls as the priority, or should the personal preference of the employees drive the overall approach to risk when buying mobile phones?
There is no right or wrong answer. Clearly mobile device choice can be emotive and personal and it depends on what is most important on a case by case basis. However, blindly pandering to the ‘wants’ of employees removes very valuable protections that would traditionally be seen as ‘needs’ in any IT security context outside of mobile.
Is your business FCA regulated? Do you have responsibility for overall risk management and compliance? Perhaps you have a team of voice traders and wealth managers. If that describes you as a business manager, then chances are that you should be very concerned. However, if you work in Compliance, Risk or Internal Audit, those business concerns could be a source of easy, high impact wins for 2014.
Compliance might do well to look closely at that IT team usually called ‘Voice Infrastructure’. Have you ever wondered what they actually do? It is often a bit of a mystery. So then how transparent do you think Voice Infrastructure teams really are on the day-to-day management of high impact IT compliance risks? I am referring to the sort of risk issues and supporting evidence that become highly visible in scandals such as Libor.
The Chancellor announced in the Budget on March 19th the end of the need for pension savers to annuitise Defined Contribution pension savings. From April 2015 anyone who is aged 55 or over will be able to take their entire pension fund as cash– although only the first 25 per cent will be tax-free. The remaining 75 per cent of the fund would be taxed at the saver’s marginal rate. The market reaction was swift: the shares of the largest annuity writers fell substantially, wiping £6bn off the UK insurers’ market capitalisation. The market fear was the loss of a substantial proportion of the £12 billion a year that is placed in annuities and the resulting loss of new business value, which for many UK life insurers equated to in excess of 50% of total new business value in the UK.
The proposed financial transaction tax (FTT) would not improve financial stability with its impact on stability likely to be negative or, at best, neutral - this is the overall finding of a Research Paper published last week by the International Regulatory Strategy Group, City of London and TheCityUK, and authored by Deloitte.
Firms that engage in securities lending and repos, referred to as securities financing transactions (SFTs), will face EMIR-like reporting requirements and stricter rules on rehypothecation under a proposal published today by the European Commission. Investment funds will also be subject to increased disclosure requirements. The proposal is designed to enhance transparency and forms part of a wider package of reforms to address the risks posed by shadow banking. It has been published alongside a proposal on structural reform for banks (see our blog for further detail), reflecting concerns from the Commission that structural separation measures might lead to banks shifting parts of their activity into the less-regulated shadow banking sector.
Deloitte’s recently published outlooks for the Life and Annuity and Property and Casualty (P&C) industries have valuable insights for executives thinking ahead. They explain how the industry globally is responding to the same challenges that haunt the UK market, covering six key topics:
Competition and markets
Insurers are preparing for more M&A. Finance is cheap, encouraging buyers. Valuations are up, encouraging sellers. P&C carriers are specifically examining M&A as a way to outstrip sluggish organic growth, held down by overcapacity.