GFIA Annual Report 2021-2022

TRADE

Better together

Policymakers and supervisors are increasingly recognising the value of cross-border (re)insurance and open markets

By Brad Smith, chair of the GFIA Trade Working Group

Open, well-regulated (re)insurance markets help to protect consumers and maintain financial stability by allowing the geographic and economic spread of risk. GFIA’s Trade Working Group seeks to demonstrate to policymakers how insurance is a vital component of economic growth, with global companies offering innovation, much-needed capacity and technological innovation to help meet existing and emerging risks. It also showcases the good work of other GFIA working groups, such as those focused on financial inclusion, climate risks and cyber risks. Over the last 12 months, GFIA has continued to focus on existing or proposed barriers to open (re)insurance trade or to seek to resolve hindrances to efficient (re)insurance markets — sharing intelligence on trade and market-access developments between members and engaging with national ministries and insurance regulators. As set out below, it has seen positive developments begin to unfold in Indonesia, China, India and Vietnam, while continuing to engage with regulators in numerous markets — including Nepal, Canada and South Korea — on ongoing reforms.

Individual GFIA member associations have also been active over the last year on specific issues related to their national bilateral trade relationships, which collectively create levers of change that can lead to positive developments in individual jurisdictions. GFIA’s collective engagement as an international stakeholder and its coordination of multiple industry requests for national advocacy from different regions have been effective at raising awareness of insurance trade issues in the context of regional and national reform agendas.

“GFIA has seen positive developments begin to unfold in Indonesia, China, India and Vietnam.”

“GFIA’s Trade Working Group has focused on market access as its first priority.”

Priority: access

GFIA’s Trade Working Group has focused on market access as its first priority, so that international companies can be licensed to operate as a first step in market development. Importantly, in 2022, China now allows 100% ownership of companies by global insurers, while India implemented a significant legislative change in 2021 allowing global insurers to own up to 74% of companies, up from 49%. GFIA would like to see India remove any investment limit and fully remove any national treatment advantages, including those unique to state-owned entities.

Chinese regulators continue to support the universal application of high standards of insurance regulation focused on consumer protection and building financial stability, so GFIA’s engagement on issues relating to China has largely been sharing information between members on the application of the National Security Law to financial services, which is still evolving. Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) has indicated a new pro-private innovation and financial inclusion initiative and it welcomes increasing dialogue with the global industry. Nevertheless, risks remain from state-owned, non-independently regulated competitors.

The Working Group also continues to lead the Coalition on Reinsurance Education (CORE). CORE combines research and advocacy resources to tackle barriers to open (re)insurance markets, such as the forced localisation of reinsurance. Here, a positive step is that Indonesia continues to broaden the liberalisation of market access for reinsurance for more GFIA members, subject to bilateral agreements.

On another multi-regional issue, GFIA continues to monitor and oppose efforts to defund private pension plans and other forms of violation of rule of law and contract certainty. The arbitrary retroactive change of liabilities and other contract terms violates numerous bilateral agreements.

GFIA’s engagement is also ongoing in response to operational barriers like data localisation for (re)insurance companies. From Vietnam to India, it has been important to highlight the need for global data platforms for companies to avoid fragmentation risk and to comply with group supervision requirements. While data localisation requirements were removed from the Vietnam Insurance Law passed in June 2022, global insurers remain at risk of being included in a new Vietnamese national security law and subjected to forced data localisation.

Another trade policy advocacy priority remains to educate policymakers on the holistic benefits that open, well regulated (re)insurance markets bring to local, national and global economies. Engaging with supervisors to explain the barriers global insurers face is critical to support innovation and market development. Building dialogues with national regulators on meeting consumer and economic growth mandates is a common interest of regulators and the industry in many markets.

Brad Smith

American Council of Life Insurers

Brad Smith

American Council of Life Insurers

Awareness-raising campaigns

Insurers across Europe are involved in a broad range of awareness-raising campaigns. For instance, in Germany, risk-awareness campaigns are implemented jointly by state authorities, consumer protection organisations, the insurance industry, architects and other stakeholders. Their collaboration is built around a common goal: to raise awareness of the effects of climate change and natural hazards, of the benefits of loss prevention, and of best practices as regards natural catastrophe-resilient buildings. The high level of risk awareness in Germany is one of the reasons for the relatively low protection gap; indeed, the insurance penetration rate for natural perils such as storm or hail is more than 90%.
Most European insurance associations have initiatives to raise risk awareness, such as dedicated workshops, events and educational seminars, as well as frequent in-depth articles, themed newsletters, presentations and other publications.
Many French insurers have launched prevention campaigns and also support the campaigns of “Assurance Prévention”, an association founded by the French insurance association (France Assureurs). Assurance Prévention has produced numerous leaflets, infographics, quizzes, etc. to raise awareness of natural risks. Through its initiatives, it aims to develop a “culture of risk prevention” among students and teachers.

The Greek insurance association (HAIC) launched a digital awareness campaign — “Better to know than to think you know” — to provide consumers with useful information about private insurance and to set the record straight on some misperceptions. The campaign consists of six videos to educate the public about how private insurance works. Most of the videos emphasise the need for resilience in the face of natcat risks and the role of insurers in protecting private property. The videos are hosted on the interactive iknow-insurance.gr platform, which allows visitors to do a short quiz to test their knowledge of private insurance and then obtain additional information.
Insurance Sweden is currently working with its members on a common methodology for calculating carbon dioxide emissions during building repairs. The aim is to raise awareness of the impact on CO2 emissions of rebuilding after fire or water damage, and thus of the importance, from that perspective as well, of preventing such damages.
Insurance Sweden published a statistical report in October 2021 on how different municipalities and regions have been affected by damage caused by flooding, storm and fire.
Spotlighting the central role of municipalities in climate-change adaptation, Insurance Sweden ranks Swedish municipalities according to their adaptation work. The methodology is based on the European Commission’s Adaption Support Tool (2013). The ranking is released every other year, the June 2021 version is available here.
UNESPA, the Spanish insurance association, launched a dedicated website in October 2021 — “Naturalmente Protegidos” (Naturally protected) to explain how natcat insurance works in Spain. It focuses on 10 different risks (rain, flood, wind, drought, frost, hail, snow, earthquake, volcanic eruption and lightning) and details for each how insurance covers property, life, harvests and livestock. The website illustrates the success of the Spanish public-private natcat insurance model. It was jointly developed by private insurers (UNESPA), the Consorcio de Compensación de Seguros (CCS) government scheme and Agroseguro, Spain’s agricultural insurance system, and was launched within the framework of Estamos Seguros, UNESPA’s financial education campaign (running since 2016).
In collaboration with CEPYME, the Spanish confederation of SMEs, UNESPA launched in October 2020 “Prevenir para crecer” (Prevent to grow), a website with information on insurance for SMEs. The website highlights potential risks to which SMEs are exposed, including natcat-related risks, and provides advice on how to prevent them.
Insurance Ireland, the Irish insurance association, and a number of Irish insurers have launched consumer blogs and information repositories on their websites to share useful information with consumers about responsible and ESG investing.

Education

The European insurance industry works to increase financial literacy in relation to risk awareness, insurance protection and long-term savings:

The Croatian Insurance Bureau (HUO) launched a first educational project in 2009, “Financial literacy in the Republic of Croatia”, which was followed by a range of educational activities, often implemented jointly with independent insurers. One of these activities, “Safer Tomorrow”, was initiated in 2021, and aims to raise citizens’ awareness of the benefits of insurance. Within the framework of the project, HUO launched several videos and infographics, some of which specifically target young people.
The HUO organises a yearly competition for the best scientific paper, the best graduate thesis and the best undergraduate thesis in the field of insurance. HUO also publishes the “Croatian magazine for INSURANCE”, a scientific journal for professionals to advance good practice in the sector. Finally, some insurers in Croatia created a colouring book for children to promote financial literacy at a young age in a fun and simple way.
In Italy, the ANIA Academy, together with CeTIF (Research Centre on Technologies, Innovation and Finance of the Università Cattolica del Sacro Cuore), launched the second edition (2022) of the 2nd level master’s in insurance management to train professionals and enable them to respond to the challenges of the “new normal”.
ANIA is also collaborating with LUISS Business School to develop a major course in insurance management as part of its Executive Master in Financial Management.
Insurance Europe produces information for consumers as part of its “InsureWisely” financial education initiative. This includes one-pagers on different insurance topics, including how to limit the effects of natural catastrophes.
The French insurance association (France Assureurs) developed a series of educational booklets within the framework of EDUCFI (the French national strategy for economic, budgetary, and financial education), an initiative launched by the French Central Bank. These booklets help users to better understand how insurance works and what insurance products do and do not cover.
The Spanish insurance association (UNESPA) set up a financial education programme for schools, “El Riesgo y Yo” (“The Risk and I”). It involves 40 insurance undertakings and 164 volunteers and aims to give 2 500 teenage school students basic financial knowledge and insights into risk management.