09 Aug 2015
“In 90% of developed countries, we have an existing mutual and co-op law. But in 55% of emerging countries, we don’t,” says Shaun Tarbuck, Chief Executive at the International Cooperative & Mutual Insurance Federation (ICMIF). “Why are we allowing countries to not have the same access to our form of insurance – which we believe is the best – in the emerging countries as we do in the developed countries? It seems very unfair.”
“This month a we’ve seen a report published by the Cambridge Institute for Sustainability Leadership (CISL) on Insurance regulation for sustainable development,” he says.
“Dr Ana Gonzalez Pelaez (fellow, CISL) and Dr Sebastian von Dahlen (chairman, G-AWG, International Association of Insurance Supervisors) – two very well respected people in the academic and business world – have written an excellent piece showing that good regulation can encourage community-based insurance that protects lives and livelihoods.
“In the Philippines, for example, CARD MBA insures around 11 million people (8.25% of the population), the majority of those below the poverty level. In 2013, with Typhoon Haiyan, they suffered a 36% loss in terms of human beings. And yet they paid out quite comfortably all of the claims within five days – 95% within one day. They were able to do that because over the last 20 years the the regulator there has encouraged the development of community-based insurance.”
But he acknowledges that there are examples of regulation being a hindrance, too: “China and India have both recently instigated mutual insurance law, with entry set at US$10 million in capital. In my view, this barrier is far too high. No community of people who are impoverished or are struggling just to get by in life can afford a $10 million capital set up fee.”
Good regulation and good governance are strongly linked, believes Mr Tarbuck, who is also part of the committee that is working on the Alliance’s governance paper. Ten years ago, the Association of Mutual Insurers in the UK (of which he was a part) produced the Annotated Combined Code for Mutual Insurers, which increased the sector’s relevance, governance skills and member engagement – and was instrumental in doubling the industry’s market share in four years, from 4% to 8%.
“Next year ICMIC is planning to review that code for the UK and make it the best practice guidelines that we will then sanction internationally,” says Mr Tarbuck. “We've also got a big piece of regulation going on the books of all European countries in January called Solvency II, the prelude of which was the 2002 Sharma Report.” Paul Sharma, a UK regulator, researched insurance company failures in Europe over the previous ten-year period. According to the report, all 30+ failures were because of poor management and poor governance – and none of them were mutual.
“As a sector we need to go more on the offensive. We've got some wonderful governance models around the world and many of ICMIF’s members have very strong engagement with their own members and a proper structure in place for appointments to boards through the membership role – NFU Mutual would be a prime example.” In 1999, NFU Mutual changed its structure from an all-farmer board to one that is still a farmer majority, but also includes the expertise they need to run a complicated insurance organization.
Mr Tarbuck is also excited about the potential outcomes of the B20 Summit, which takes place in Antalya in November, immediately after the Alliance's Global Conference and General Assembly. He is a member of the B20 taskforce for financing growth.
“There is so much on influence and lobbying that the Alliance and ICMIF are doing collectively, but we're also doing a huge amount with the UN, the OECD, the world economic forum.… Things are changing by the day in this area. We’ve got some great stories and great successes already. For example, we’ve now got insurance mentioned as a separate sub-group at the B20. I know it says insurance, but guess who will be leading that task force? It’s me. It's the mutual insurance leading the way.”