GFIA Annual Report 2023-2024

Corporate governance & market conduct

Strengthening consensus: GFIA's role in global supervision

Tackling market conduct and corporate governance challenges collaboratively

By David Snyder, chair of the GFIA Corporate Governance and Market Conduct Working Groups

The insurance industry is facing increased supervisory activity beyond traditional oversight, posing new challenges for the industry to develop and communicate a consensus position on pressing issues like climate change, AI and diversity, equity and inclusion (DEI). Thanks to the work of the members of the Market Conduct Working Group and the Corporate Governance Working Group, in collaboration with other working groups and an effective GFIA secretariat, GFIA is increasingly viewed as a reasonable and credible voice on these issues and other supervisory matters.

In the past year, GFIA has actively participated in discussions, presentations and contributions with major global regulatory bodies across the sector.

“GFIA is increasingly viewed as a reasonable and credible voice on these issues and other supervisory matters.”

GFIA’s responses to IAIS papers on climate and DEI

Climate: The Market Conduct Working Group, in collaboration with the Climate Risks Working Group, provided extensive comments to the IAIS on an application paper on climate related market conduct issues. In general, GFIA raised some fundamental issues on the overly prescriptive paper and requested more dialogue.

Diversity, equity and inclusion: Another IAIS paper, this time on serving diverse consumers through DEI, also required extensive work and comments by the Market Conduct Working Group, in collaboration with the DEI Working Group. Among the comments, GFIA reaffirmed its commitment to DEI and outlined its core principles on the subject. GFIA also supported language on the importance of recognising jurisdictional differences. Concerns were raised, however, as the paper became too prescriptive in its provisions, apparently requiring insurers to take account of how and why each person thinks and behaves.

“In the past year, GFIA has actively participated in discussions, presentations and contributions with major global regulatory bodies across the sector.”

OECD corporate governance presentation

This year, I was invited to present on behalf of GFIA to the OECD’s Insurance and Private Pensions Committee on insurer corporate governance. Again, the invitation reflected how GFIA is increasingly viewed as a reasonable and credible voice. Based on guidance from the Corporate Governance Working Group, GFIA emphasised the leading role of insurers in their own governance and how they are addressing climate, AI and DEI. GFIA followed up with communication to the OECD after noting that insurer governance changes are being considered in response to updates made by the OECD to its general corporate governance guidance.

“GFIA emphasised the leading role of insurers in their own governance and how they are addressing
climate, AI and DEI.”

Artificial intelligence in the insurance sector

Supervisors are becoming more concerned with how AI is being developed and used in the insurance sector. Working with the Disruptive Technologies Working Group, the Corporate Governance Working Group assisted in providing talking points for two IAIS roundtables last summer. The general view was that the roundtables were mutually useful for stakeholders and insurers.

A busy year of collaboration

It is a real credit to the trust built among GFIA members that meaningful consensus comments were provided to international supervisors on climate, DEI and AI issues despite the presence of strongly held views and significant jurisdictional differences.

In the coming year, GFIA expects more supervisory activity on all these matters, that will continue to need the commitment and contribution of both the Corporate Governance and Market Conduct Working Groups.

David Snyder

American Property Casualty Insurance Association

David Snyder

American Property Casualty Insurance Association

Print version

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.