2024 is a pivotal year for global politics, with elections impacting half the world. In the EU, citizens took to the polls to elect the next European Parliament which sits for the first time on 16 July. The elections kick-started a series of institutional changes, including the European Council setting out it's priorities for the next five years and the start of a new European Commission mandate in autumn this year.
The last five years were marked by unprecedented events, including the COVID-19 pandemic and a war in Ukraine. The list of wider global challenges includes climate change, an energy and food crisis, an ageing and shrinking working age population, inflation, national and geopolitical tensions, digitalisation, deglobalisation and disruption in supply chains.
In the current environment of increased uncertainty, Europe’s need for the protection and investment that the insurance industry can provide has probably never been higher. There is a growing need to work towards closing protection gaps, be they known but growing risks such as natural disasters or pensions, or those that have emerged more recently such as cyber risks.
#Insurancematters
Our sector makes unique contributions to society by providing a wide range of protection and savings products to individuals and businesses and by investing long-term in the economy. Yet, we are increasingly confronted with the consequences of policymakers not fully understanding how our industry works. As many new incoming members of the European Parliament will arrive in Brussels after the elections, Insurance Europe will work to explain the strategic role and importance of our sector, as well as its business model. With the right framework conditions our sector’s contributions to key societal and economic challenges, including climate change, health, digital transformation, competitiveness and fostering the EU Capital Markets Union can make a real difference.
Regulation matters — key challenges and recommendations
To ensure Europe’s prosperity, resilience, autonomy, and competitiveness in the face of the climate, technological, demographic, and other contemporary challenges, it is key to address the priority areas outlined below.
The right actions from policymakers will help progress on these priorities and allow insurers to do even more. We highlight some aspects of these priorities below along with a few of the actions needed to address them.
For insurers to play their role as both providers of protection and institutional investors, a fit-for-purpose regulatory framework is of paramount importance. Sound and trusted regulation is vital for healthy EU industries that can thrive at home and abroad. Unfortunately, in recent years, regulation has become more complex, and an unnecessarily high regulatory burden has been put on the insurance industry. The reasons for this vary, ranging from the sheer amount of new regulation proposed in recent years to the fact that regulation is often not tailored to the specifics of our sector.
For example, in 2007, we were intensively working on 12 EU texts, then 5 years ago we were at 21, and today we are at 63. While they are not all targeted specifically to the insurance sector, the insurance sector has to comply to them all. In this respect, it is positive that the European Commission, with their target to reduce reporting burden by 25%, has recognised that there is a need to reassess and reduce reporting for EU businesses. However, it is important that this statement of intent is turned into real reductions for European insurers.
Beyond this, regulation is currently often not fit to cater to the unique features of the insurance business model. It is key that those with knowledge of insurance and expertise in the sectors’ regulation are involved in its development from the onset. The European Commission should set up an “insurance expertise centre”, serving as a knowledge hub across all Directorate-Generals. It would ensure that regulation will work for insurers and meet the intended objectives without compromising insurability and, ultimately, sustainability and resilience.
Creating a dedicated insurance expertise centre would also help to deepen the awareness of the essential role that data plays in the ability of insurers to underwrite risks. Indeed, the use of and, primarily, access to, data is fundamental to the provision of insurance services. Data enables insurers to assess the overall risks and make sure that future claims are being paid. As such, data is at the heart of the sustainability of the business model and the ability of insurers to provide security and protection. We however observe that insurers’ use of and access to data is under increasing threat, which is another reason why we continue efforts to explain how insurance works. It is key to ensure that insurers have access to and can make use of data to the benefit of customers.
Insurance Europe’s mission continues to be to promote the value of insurance and to increase policymakers’ understanding of how it works so that regulatory solutions are found that work for insurance customers and their providers, as well as for the economies and societies of Europe. We look forward to continuing our engagement with the EU institutions in the new mandate and stand ready to provide the sector’s expertise and views.
READ THE INSURANCE INDUSTRYS PRIORITIES AND RECOMMENDATION FOR THE EU