More regulation for more protection for the customer? How to use regulation to the customer s advantage.

Transcription

1 MAIF Group 1 Insurance aggregators and consumer s protection 2 Credit / mortgage insurance and consumer s purchasing capacity 3 Mutuals governance and consumer s involvement More regulation for more protection for the customer? customer s advantage. MAIF Group 1 Insurance aggregators and consumer s protection 2 Credit / mortgage insurance and consumer s purchasing capacity 3 Mutuals governance and consumer s involvement More regulation for more protection for the customer? customer s advantage. 1

2 MAIF Group Key figures at 31 December th largest French private car insurer 5rd largest French home and contents insurer 3.4 millions members 7,000 employees More than 15.8 billion assets under management Turnover : MAIF + Filia-MAIF (Non-life) : million Parnasse MAIF (Life) : 549 million Net results : MAIF : 109 million Filia-MAIF : 12 millions Parnasse MAIF : 7 million Importance of insurance aggregators in France Timid incursion of aggregators in France in the 2000s. Inceased use due to the economic crisis, budget constraints and insurance price increases. Increasing search for "buying smart", triggered by the value of the "Price" element. Issues raised by the use of these aggregators Existence of legislation on insurance intermediation that protects efficiently consumers, but does not apply to these insurance aggregators. Comparison focused on price at the expense of content guarantees. Economic model of the aggregators based on high turnover of the policyholders portfolio, which can only be achieved by focusing on price. Lack of transparency on the economic model and the status of the aggregators. No real control of these new players which benefit in fact from beneficial competitive advantages regarding insurance intermediation. 2

3 Importance of insurance aggregators in France Timid incursion of aggregators in France in the 2000s. Inceased use due to the economic crisis, Augmentation de leur utilisation à la faveur de la crise économique, budget constraints and insurance price increases. Increasing search for "buying smart", triggered by the value of the "Price" element. Issues raised by the use of these aggregators Existence of legislation on insurance intermediation that protects efficiently consumers, but does not apply to these insurance aggregators. Comparison focused on price at the expense of content guarantees. Economic model of the aggregators based on high turnover of the policyholders portfolio, which can only be achieved by focusing on price. Lack of transparency on the economic model and the status of the aggregators. No real control of these new players which benefit in fact from beneficial competitive advantages regarding insurance intermediation. Importance of insurance aggregators in France Timid incursion of aggregators in France in the 2000s. Inceased use due to the economic crisis, Augmentation de leur utilisation à la faveur de la crise économique, budget constraints and insurance price increases. Increasing search for "buying smart", triggered by the value of the "Price" element. Issues raised by the use of these aggregators Existence of legislation on insurance intermediation that protects efficiently consumers, but does not apply to these insurance aggregators. Comparison focused on price at the expense of content guarantees. Economic model of the aggregators based on high turnover of the policyholders portfolio, which can only be achieved by focusing on price. Lack of transparency on the economic model and the status of the aggregators. No real control of these new players which benefit in fact from beneficial competitive advantages regarding insurance intermediation. 3

4 Key factors for a complete and loyal enhanced consumer protection Allow the emergence of independent and neutral aggregators. Make clear the status of comparators and specify their mode of remuneration. Clarify the rules for selection of the quotes, and make visible to the consumer the representativeness of the aggregators on the market. Strengthen the accountability of aggregators as insurance intermediaries, subjecting them to the same rules in this area as insurers. Make impossible the transmission of prospects personal data to third parties. Show separately the guaranties of the contracts that derives from legal obligations. Complete the display with items regarding the validity of the offer. Key factors for a complete and loyal for enhanced consumer protection Allow the emergence of independent and neutral aggregators. Make clear the status of comparators and specify their mode of remuneration. Clarify the rules for selection of the quotes, and make visible to the consumer the representativeness of the aggregators on the market. Strengthen the accountability of aggregators as insurance intermediaries, subjecting them to the same rules in this area as insurers. Make impossible the transmission of prospects personal data to third parties. Show separately the guaranties of the contracts that derives from legal obligations. Complete the display with items regarding the validity of the offer. 4

5 2 - Credit / mortgage insurance and consumer s purchasing capacity Market of credit / mortgage insurance little fluid, unlike other insurance products In France, 85% of new mortgages carry a credit insurance proposed by the bank. No right to terminate at any time this insurance contract, unlike the automobile and home insurance. A particularly profitable product for banks at the expense of consumers. Levers to release the purchasing power of consumers The infra-annual termination of insurance contracts, today enshrined in French law for auto and home insurance, should be extended to the mortgage insurance to liberalize the insurance market: the impact on the purchasing power of households would be significant. The absence of a right to terminate at any time the mortgage insurance contract protects what is similar to a economic rent for the current major players in the market. 2 - Credit / mortgage insurance and consumer s purchasing capacity Measurable benefits to the consumer The development of alternative insurance offers to the bank s contracts would lower the percentage rate of the loan from 30 to 35 basis points for half of the borrowers on a component of the cost of credit, which represents nearly 25% on average. A perspective of 480 savings on average per year for an alternative mortgage insurance contract, while the average annual gain of such a measure for a car contract is estimated at only 229. The possibility of adapting the contents of the mortgage insurance contract to change in the situation of the policyholder. 5

6 2 - Credit / mortgage insurance and consumer s purchasing capacity Measurable benefits to the consumer The development of alternative insurance offers to the bank s contracts would lower the percentage rate of the loan from 30 to 35 basis points for half of the borrowers on a component of the cost of credit, which represents nearly 25% on average. A perspective of 480 savings on average per year for an alternative mortgage insurance contract, while the average annual gain of such a measure for a car contract is estimated at only 229. The possibility of adapting the contents of the mortgage insurance contract to change in the situation of the policyholder. 3 - Mutuals governance and consumer s involvement The mutual governance: a specificity servicing consumers but sometimes maltreated by regulation Different national laws often offer greater freedom of organization of mutual governance across the European Union. The member is not a simple "client" in the mutual organization: it is a full participant in the life of the company, including at the highest level of the latter. Each Mutual, through its members, decides how it wants to organize this governance. Inadequate transposition of banking rules in Solvency 2 Under Solvency 2, a rule from the banking sector is likely to have a major impact on the mutual governance: it is the rule of "four eyes. In some mutuals, Presidents do not exercise managerial functions, but nevertheless are involved in the determination of the strategy: may this President, who does not also hold the position of Director-General, be part of the 4 eyes? Divergent interpretations. 6

7 3 - Mutuals governance and consumer s involvement The mutual governance: a specificity servicing consumers but sometimes maltreated by regulation Different national laws often offer greater freedom of organization of mutual governance across the European Union. The member is not a simple "client" in the mutual organization: it is a full participant in the life of the company, including at the highest level of the latter. Each Mutual, through its members, decides how it wants to organize this governance. Inadequate transposition of banking rules in Solvency 2 Under Solvency 2, a rule from the banking sector is likely to have a major impact on the mutual governance: it is the rule of "four eyes. In some mutuals, Presidents do not exercise managerial functions, but nevertheless are involved in the determination of the strategy: may this President, who does not also hold the position of Director-General, be part of the 4 eyes? Divergent interpretations. 3 - Mutuals governance and consumer s involvement The sovereignty of the member in the mutual governance must be preserved The reality of power must be determined mutual by mutual, and not unilaterally imposed by legislation. The ban that would be made to the Chairman of the Board to participate in the effective management of the company would be a violation of the rights and duties of members representatives or delegates. The text on the "four eyes principle should be as open as possible, allowing each insurance Mutual freedom to appoint its "executive officers" 7

8 3 - Mutuals governance and consumer s involvement The sovereignty of the member in the mutual governance must be preserved The reality of power must be determined mutual by mutual, and not unilaterally imposed by legislation. The ban that would be made to the Chairman of the Board to participate in the effective management of the company would be a violation of the rights and duties of members representatives or delegates. The text on the "four eyes principle should be as open as possible, allowing each insurance Mutual freedom to appoint its "executive officers" Conclusion Consumers protection : legislation on insurance intermediation, currently under review, should fully apply to the insurance aggregators to ensure the same level of protection and transparency regardless of the channel used by the consumer. Consumers purchasing capacity: the right to cancel at any time auto and home insurance contracts should be extended to the mortgage insurance in order to stimulate competition to the benefit of consumers. Consumers involvement: the "four eyes" principle in Solvency 2 must respect the principle of sovereignty of the members in the governance of mutual insurance companies. 8

9 Thank you for your attention 9