This post is by guest contributor Jeff Willems, who is VP Client Services at MoneyMate. Jeff recently attended the EIOPA Conference in Frankfurt and in this post he is discussing transparency, one of the hot topics at this year’s conference.
During his opening note at the 2013 EIOPA conference, chairman Gabriel Bernardino reminded the audience that investors are becoming increasingly sophisticated, and the web generation demands greater transparency. However, are consumers really better equipped to make the right choice among a vast array of investment products? Is it fair, given that their life savings and wellbeing in old age are at stake? Speakers were later challenged to define transparency and in the process wondered how much information is too much information. One panellist used an analogy that raised a few laughs in the audience. His plumber was fixing the shower and walked him through every step of the process while giving him multiple options on pipes, shower pumps etc. “Listen, I just want to turn this thing on and get wet!” He exclaimed. From that point onwards, a consensus emerged that transparency was about a simple message, a promise that the consumer can trust. Let’s go back to basics and provide consumers with the promise to deliver investment products that will not only protect their capital but deliver a return appropriate to their ‘defined ambition’.
Back to our plumber; to deliver this simple promise of getting his customer reliably and comfortably wet, he needs to process information on water pressure, temperature and lots of other variables that a trusted plumber should understand and consider. At this level, granularity is required and one can therefore conclude that a simple message can only be transparent if backed-up by detailed evidence and where appropriate skills have been applied to analyse and understand the data.
There is no doubt that the consumer would benefit from simple choices when it comes to their long term investment choices. They should trust that the simple ‘transparent’ promise made to them will be fulfilled because it is backed up by an institution that understands the details of their investment. This is particularly important as products diversify further in asset classes and geographic regions to harness global growth. The industry should therefore embrace greater standardisation of data and explore big data solutions that will empower them to process granular information as the foundation to sound data analysis and governance. This is true in the context of implementing Solvency II where the ability for insurers to look-through to leaf level investment is a key requirement. It is also true in empowering regulators to process vast amounts of disclosed information as recognised by Patrick Hoedjes, EIOPA; or in other key areas such as client segmentation as suggested by Denis Kessler, CEO, SCOR SE.
Filed under: insurance regulation, regulation, Solvency II, transparency Tagged: EIOPA Conference, regulation, Solvency II, transparecy Image may be NSFW.
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