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Our voice in the world

Noel Pettersen

Noel Pettersen, Chief Executive of NIBA,
Insurance & Risk Professional, June 2008

In a globalised world industries need to speak increasingly with a single voice before key regulatory and supervisory players. With the World Federation of Insurance Intermediaries (WFII) we have this single voice. There is certainly a push among the regulators internationally, assisted by the International Society of Securities Commissions, to have relatively uniform legislation. And as we’ve seen from recent reports the new Federal Government has commenced discussions in the United States regarding mutual recognition in the finance sector.

I recently returned from the 2008 Annual WFII World Council and Executive Committee meetings held in Madrid. The meetings were hosted by the Spanish association of insurance intermediaries, Consejo General de Colegios de Mediadores de Seguros, and BIPAR (the European Federation of Insurance Intermediaries).

Representatives from global associations gave us excellent opportunities to hear first-hand from the top, exchange information and learn more about future directions of the industry globally. These guests included Michel Flamée, Chairman of the International Association of Insurance Supervisors (IAIS), and José Ribeiro, Director of International Markets and Business Development of Lloyd’s.

The most important challenge that WFII faces during the current year will be the work carried out by the IAIS on market conduct, which is the basis of a report by Mr Flamée for the so-called joint forum of financial regulator organisations.

He indicated that the role of intermediaries will be “discussed and developed at the right time in the future”.

He added that “knowing your client principles and suitability testing” will be important for all intermediaries in future discussions.

The World Council also discussed principles for adoption by WFII in the context of possible future IAIS strategies. Certainly the basis of WFII’s ongoing success has been to always work in advance and anticipate the regulators’ agenda. This is why WFII is now preparing to address any concerns that may be identified in the joint forum’s report and subsequently by IAIS.

After three days of discussions the following common issues were identified as being on the agenda of many associations worldwide:

  • Remuneration systems/transparency (voluntary or imposed);
  • Conflicts of interest;
  • The ageing workforce in the insurance intermediary industry and encouraging young people to enter the industry;
  • Mergers and consolidation – brokers acquiring brokers, insurers buying brokers;
  • In some regions of the world, a growing convergence between financial/investment intermediaries and insurance intermediaries is taking place. IAIS is starting to study a possible “harmonisation” of regulatory requirements on investment and comparable insurance products;
  • Ongoing effects of the Spitzer investigation into remuneration practices and a European Union inquiry into business insurance. The main issues of concern identified in the EU sector inquiry are also issues on the agenda of many other countries (transparency/disclosure of information, remuneration, conflicts of interest);
  • Catastrophic risks and terrorism;
  • Financial/insurance education of the public;
  • Liberalisation;
  • Micro-insurance (insurance for the under-privileged).

What does all of this mean to brokers in Australia? Put simply, it means that NIBA is at the table – at the forefront of international discussions – where we can truly make a difference.

It also means that NIBA is able to learn from others and likewise, many associations have been surprised at the advanced activities undertaken by Australian brokers, particularly in relation to education and training through NIBA College.

Personally, I always feel a strong sense of pride when I come away from these international meetings knowing full well that in this part of the world we’ve always successfully punched well above our weight.