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Emerging Trends in the Insurance Market

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Matt Rafferty, General Manager of QBE European Operations, addressed Dublin Chamber members on "Emerging Trends in the Insurance Market". Matt discussed how external influences and events can impact …

Matt Rafferty, General Manager of QBE European Operations, addressed Dublin Chamber members on "Emerging Trends in the Insurance Market". Matt discussed how external influences and events can impact upon local markets and businesses.

Matt Rafferty joined QBE in January 2009 to focus on the expansion and growth of the specialist business insurer. QBE Ireland has been offering insurance via the broker market in the Casualty, Motor Fleet, Commercial Property, Liability and Professional Financial Lines sectors in Ireland since 1988. QBE employs almost 100 people in its offices located on Sir John Rogerson’s Quay, Dublin.

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  • 1. Matt Rafferty – General Manager, IrelandQBE European Operations
    Presentation to Dublin Chamber of Commerce – 27th September 2011
  • 2. Emerging Trends in the Insurance Market
    Presentation to Dublin Chamber of Commerce – 27th September 2011
  • 3. Insurance – The Journey
    Page 2
    2011-09-27 Presentation to Dublin Chamber of Commerce
    • ‘As it was in the beginning and ever shall be...’.
    • 4. It is now interweaved into the very fabric of our society.
    • 5. It is now interweaved into the fabric of our economy.
    • 6. Resilience to global catastrophes.
    • 7. How is it reacting to global trends?
    • 8. How is it reacting to domestic trends?
  • Lloyds’ – formed to transfer simple individual risks to a pool arrangement – ‘The losses of the few...’
    Page 3
    2011-09-27 Presentation to Dublin Chamber of Commerce
    ‘As it was in the beginning...’
  • 9. Property
    Business Interruption
    Theft, Glass, Money
    Credit
    Third Party liability insurances.
    Soon moved on to broader range of business cover
    Page 4
    2011-09-27 Presentation to Dublin Chamber of Commerce
  • 10. A broad range of Personal Insurances
    Motor
    Home
    Travel
    Personal Accident
    Health
    Even our beloved pets....
    Page 5
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Personal Insurances followed....
  • 11. Space
    Pharma/Chemicals
    Rich & Famous
    Reinsurance
    And even more clever ones...
    Specialist markets emerge...
    Page 6
    2011-09-27 Presentation to Dublin Chamber of Commerce
  • 12. Clever....but maybe too clever?
    Page 7
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Complex/diverse financial instruments
    Finite Risk
    CDS’s
  • 13. Insurance – what is it today?
    Page 8
    2011-09-27 Presentation to Dublin Chamber of Commerce
    No longer just a piece of paper
    Decision for the buyer is more complex
    Trend to providing services, many of which give something back to the customer
  • 14. Insurance – the emergence of embedded services and ‘Add-Ons’
    Page 9
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Support services are now standard for:
    • Vehicle Replacement/Breakdown/Towing/Delivery
    • 15. Risk Management/Loss Control
    • 16. Legal Advice
    • 17. Repatriation
    • 18. Counselling and Rehabilitation
    • 19. Crisis Management
  • Insurance within the social fabric
    Page 10
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Instrumental in transforming attitudes globally and domestically for:
    • Building Standards
    • 20. Health & Safety in the workplace
    • 21. Road Safety
    • 22. Employer/Employee relationships
    • 23. In Ireland as a leading lobbyist to government for having PIAB, Penalty Points, improved road infrastructure, ANPR/NFD and greater enforcement of laws.
  • Insurance within the economic fabric
    Page 11
    2011-09-27 Presentation to Dublin Chamber of Commerce
    • Protection against the routine and catastrophic events.
    • 24. Allows business to do business.
    • 25. Protects and promotes entrepreneurship.
    • 26. Invests in business.
    • 27. Provides and protects employment.
    • 28. Contributes to GDP and balance of payments.
  • Insurance - within the domestic economic fabric (2009 data)
    Page 12
    2011-09-27 Presentation to Dublin Chamber of Commerce
    • Contributes 7.5% of our GDP (up on 2008).
    • 29. Holds capital values of assets in excess of €78bn (up on 2008).
    • 30. Employs nearly 15,000 people.
    • 31. Sponsors an array of interests – particularly in the Leisure and Sports sectors.
  • Reactions/resilience to global catastrophes
    Page 13
    2011-09-27 Presentation to Dublin Chamber of Commerce
    1989: Hurricane Hugo devastated Charleston
    • The city outpaced growth predictions in 7 of the following 10 Quarters.
    1994: Southern California Earthquake
    • SC economy grew faster than it had before the disaster.
    1995: Kobe Earthquake + 6,400 fatalities – Manufacturing hub of Japan & 6th largest trading port in the world.
    • 12 months later – virtually business as usual.
    • 32. 15 months later - @ 98% of manufacturing output.
  • Reactions/resilience to global catastrophes
    Page 14
    2011-09-27 Presentation to Dublin Chamber of Commerce
    • View of many economists that countries who suffered climatic disasters – grow faster and are now more productive.
    • 33. ‘Broken Windows’ scenario – upgrade/more productive industries.
    • 34. Finance is redistributed from Insurance Companies to construction workers and to homeowners.
    • 35. Smooth and quick recoveries but the real tragedy is that they are getting too much practice.
  • Insurance – Recent Global Issues
    Page 15
    2011-09-27 Presentation to Dublin Chamber of Commerce
    2010
    • February – Chile Earthquake - $8bn to $10bn insured loss.
    • 36. March – Europe Wind/Flood - $4bn insured loss.
    • 37. September – NZ Earthquake - $4bn to $6bn insured loss.
    • 38. December – Australia Floods - $1bn to $2bn insured loss.
    2011
    • January – Australia Floods - $4bn to $6bn insured loss.
    • 39. February – NZ Earthquake - $6bn to $10bn Insured loss.
    • 40. March – Japan Earthquake - $25bn to $40bn insured loss.
    15 month period – 4 of the top 5 most costly earthquakes in the history of the insurance industry.
  • 41. Insurance – Reaction to recent Global Issues
    Page 16
    2011-09-27 Presentation to Dublin Chamber of Commerce
    • Reinsurers have generally absorbed these losses
    • 42. Financial strength remains generally unimpaired
    • 43. Likely to affect M&A activity
    • 44. Some mono-line and smaller players may be under greatest pressure
    • 45. But there is talk that at a global level, Property premiums/rates will need to move – but which direction and at what pace?
  • Premium density remains relatively stable
    Growth in claims activity
    Erosion/fall in the premium base
    Increased claims frequency
    Reduced average premiums
    So what is the trend in the domestic Commercial Lines (P&C) market?
    Page 17
    2011-09-27 Presentation to Dublin Chamber of Commerce
  • 46. Insurance Density – Global Comparisons
    Page 18
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Insurance Data Source : Irish Insurance Federation
  • 47. Domestic Trends – the raw data
    Page 19
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Insurance Data Source : Irish Insurance Federation
  • 48. Domestic Trends – A perfect storm?
    Page 20
    2011-09-27 Presentation to Dublin Chamber of Commerce
    Insurance Data Source : Irish Insurance Federation
  • 49. Global:
    Depletion in reserves caused by recent catastrophic events both natural and financial
    Challenging investment portfolios
    ‘Property capacity is likely to be diminished and rates will harden’
    Domestic:
    Frequency up and spending down – the perfect storm?
    Difficult economic and investment conditions
    ‘We need to look at the patterns and get back to our knitting’
    The trend and outlook in summary
    Page 21
    2011-09-27 Presentation to Dublin Chamber of Commerce
  • 50. Thank you
    Presentation to Dublin Chamber of Commerce – 27thSeptember 2011