“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.”
Mr Tarbuck will be one of the speakers debating co-operative representation and advocacy at the International Co-operative Alliance’s 2015 Global Conference in Antalya, Turkey in November, in a break out session on legal frameworks. It’s an area of research that ICMIF actively supports.
“This summer we saw a report published by the Cambridge Institute for Sustainability Leadership (CISL) on Insurance regulation for sustainable development: Protecting human rights against climate risks and natural hazards,” he says.
“Dr Ana Gonzalez Pelaez (fellow, CISL) and Dr Sebastian von Dahlen (chairman, G-AWG, International Association of Insurance Supervisors, Basel) – two very well respected people in the academic and business world – have written an excellent piece showing the fact that good regulation can encourage community based insurance that protects lives and livelihoods.”
He gives the example of CARD MBA, a “fantastically run organisation of co-operative insurers in the Philippines”, which insures 11 million people (8.25% of the population), the majority of whom live below the poverty line. “In 2013, with Typhoon Haiyan, they suffered a 36% loss in terms of human beings,” says Mr Tarbuck, “and yet they paid out all of the claims within five days – 95% within one day.
“They were helping the people on the ground immediately – and they were able to do that because over the last 20 years, 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, member engagement – and was instrumental in doubling the industry’s market share in four years, from 4% to 8%.
“Next year ICMIF 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 the 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 organisation.
Shaun Tarbuck cites overregulation, the low interest rate environment and relevance in a world that is capital rich as the main challenges, but the figures are still encouraging. “Since the financial crisis in 2007, the insurance sector has grown by 11%. The mutual insurance sector has grown by 28% and ICMIF members have grown by 34% – we are seeing significant growth across all regions in all areas of business, life and non-life. One of the major reasons for that is because we’re in close proximity to our customers. We are aligned to their thinking so we provide products that they need.”
In insurance, the products are pretty much the same, he adds, but the difference comes down to the wordings. “Take household insurance,” he says. “A shareholder-based company will try to mitigate its claims by putting more exclusions in there. A mutual insurer will go the opposite way. It will say ‘we only exist to pay these claims. We only exist to help people when they need helping. So we’ll include everything in there’.”
But connecting with people is, in Mr Tarbuck’s view, an ongoing struggle for insurance companies, especially in terms of the gen Y and gen Z communities. “A lot of it comes down to the leadership of individual member organisations, but I think emerging countries are finding it much easier to connect with gen Ys than developed countries. My kids and their friends are never going to go to an insurance broker to buy a product. So why are we still going on about it? We need to find a different way to engage.
“We need to have a strategy around gen Y and social media. At the end of the day, what is Facebook, what is LinkedIn? It’s a sharing platform. What is a co-op or a mutual? It’s a sharing platform. It shouldn’t be a big leap of faith to say ‘mutuals and co-ops are a bit like Facebook, but they’ve been around a lot longer’.”
He also believes emerging markets are leading the way in terms of mobile technology. “CIC Kenya has had mobile technology for payments for insurance products for 10 years now – way ahead of anyone in the developed world – because Africa doesn’t have land lines, so everything is done through the mobile. In Brazil, Unimed are already selling over the mobile. So yes we are ahead of the game, but is mobile technology the way to go? No, it was the way to go – it’s already been done by co-ops.”
If it’s been done, what’s next? “What I’m hearing is that everyone is scared of Google Insurance,” says Mr Tarbuck. While they are already licensed in the US, he thinks they will struggle in Europe because of the Data Protection Act. “Google is, without a doubt, a danger, but they are not going to go after the affinity groups, the co-ops, initially. How much data has Google got on your customers? How much have you got on your customers? It’s actually about the same. We just need to work faster and smarter with the digital information we have on our customers, to make sure they are aware of what we do for them.”
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? It’s me. It’s the mutual insurance leading the way.”
In this article
- Ana Gonzalez Pelaez
- Association of Mutual Insurers
- B20 Taskforce
- Cambridge Institute for Sustainability Leadership
- community-based insurance
- insurance sector
- International Association of Insurance Supervisors
- International Co-operative Alliance
- International Cooperative & Mutual Insurance Federation
- Mutual insurance
- mutual insurance law
- NFU Mutual
- Paul Sharma
- Sebastian von Dahlen
- Shaun Tarbuck
- United Nations
- United States
- World Economic Forum
- North America
- Top Stories