Conference: Het nieuwe spel en de knikkers, Den Haag

February 9th, 2006

The Exaxe™ sponsored conference on the effect of regulation on the relationship between Life Assurance Providers and Intermediaries took place in the Hague on the 9th February 2006. Key individuals in the Dutch, UK and Irish life assurance markets addressed the ½ day conference and shared experiences on some fundamental issues now facing Exaxe's industry. Enterprise Ireland co-hosted the event. Some controversial views were expressed: provocations were thrown at the attendees and a lively debate ensued.

After an introduction by Philip Naughton, Executive Director Business Development Exaxe™, the role of the Chair was taken up by Dick-Jan Abbringh. Dick-Jan also presented a vision of the future of the financial services sector, based on trends he has been studying in other sectors over the last few years.

Adrian Hegarty, CEO of the Friends First Group in Ireland the financial services conglomerate, outlined the position of Friends First when he first took over the organisation and the changes made to tackle the problems he faced. This included understanding the value contribution of the various segments within the group, developing a strategic vision for the group and rationalising business segments to support that vision and streamlining the company's relationship with its independent broker base. Friends partnered with Exaxe to deliver key process efficiencies – for instance around quotations and illustrations and agency and commission management systems. Friends First is a fascinating case study in how a financial services group expanded and acquired under the mantra of big is beautiful during the heydays of the 80s and early 90s to becoming stuck in the middle and languishing in the mid 90s and now embracing the 21st century demands for cost and process efficiencies and transparency.

Paul Van Raaij, Head of Systems Development for Falcon Leven took us through the problems facing Falcon Leven with their distribution and product development processes. Falcon Leven is a relative newcomer to the Dutch market and distributes only through the brokerage network. Its model is predicated on excellent customer service (to its broker network). He suggested the focus for IT directors over the next couple of years will be:

The insurance provider needs to be able to provide the broker with “his own products” and in a speedy manner. For example, by taking quotations off the critical path, (through IT designed calculations engines) the time to market is now dramatically reduced. Paul explained how the selection of domain expert IT product providers supports rather than hinders the IT director. He described how Falcon Leven undertook a major streamlining of their business processes network, using technology to standardise and ensure compliance with the Dutch regulatory framework. On being asked to react to the view that the insurer should take the relationship with the policyholder back inhouse, Paul firmly sticks to the view that specialism is key to developing a value proposition for the policyholder.

Malcom Small (www.lyncombeconsultancy.com) is an expert in the UK regulatory environment and expressed some controversial views on the future relationship between the insurer and intermediary, the role of government, historic and structural reasons why the Netherlands is better positioned than the UK to respond to EU generated regulation - Roman law vs English common law. Over the last several years the trend towards intermediation and specialism has driven the industry.

The jury in the UK remains out on the impact of depolarisation, but the costs and risks of intermediated business are rising. Malcolm ended his presentation suggesting the insurer should consider forming direct client relationships wherever possible rather than relying on service from the intermediary. Intermediation has created separation between the provider and the end customer, preventing effective management of the relationship. Until now, this has not mattered, but the prospect in the UK of increased liability for product sales and post sales service under new regulatory initiatives may force a change in thinking. This was a nice provocation to engage the attendees in expressing their visions of the future.

The conference ended with a panel session, which covered the main points of the presentations and a discussion on visions for the future. One view suggested that we the consumers would be designing and buying Exaxe's own products in the future, without either advice or intermediaries.

Overall, the conference attendees deemed it to be a very useful exercise. Exaxe™ were pleased to be able to facilitate such a discussion and further build its knowledge of the Dutch insurance environment. They were delighted with the support they received from Enterprise Ireland in co-hosting the event.

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