It is a great pleasure for me to be here with you today to launch the European Insurance Forum. It is a particular pleasure to welcome all the international delegates to this conference. I hope you enjoy your stay in my favourite city - and I hope we will see you here again some time in the future.
The European Insurance Forum
This Forum has been hugely successful since its inception in 1999. It provides a great opportunity for key players in insurance and reinsurance to meet; to exchange information and ideas; and to discuss the challenges for the future of the industry. I am sure you will all bring back to your day jobs many useful insights and perspectives.
Current economic climate
As a small and very open economy, we in Ireland are of course directly affected by changes in the international economic environment. There is no doubt that current global outlook is challenging but, as I pointed out recently, there are a number of factors that have left our banks here in a strong position to withstand the current difficulties on the international financial markets:
- The economic backdrop in Ireland is one of relatively solid performance, with the economy continuing to grow and unemployment remaining at moderate levels. In addition, our public debt is at very low levels by international comparison;
- The indicators that measure the health of the banking system, such as capital adequacy ratios and the quality of loan books, as well as the ability of the banks to fund their operations, all continue to signal a strong state of health for the industry here;
and
- Our domestic banks have virtually no exposure to the sub-prime mortgage market, or to related instruments, in the US or elsewhere.
In addition, our Central Bank and Financial Regulator have maintained an active and ongoing dialogue with domestic credit institutions to keep issues relating to the domestic banking system under continuous review.
I believe we can be confident about our capacity to weather the current turbulence and uncertainty. The facts are that we have a dynamic economy; a well-educated, flexible and highly productive workforce; excellent tax incentives; an education system that delivers for business; a supportive regulatory and legislative framework; and a pro-business Government. This allows us to respond with confidence to less favourable economic conditions.
And this is not just government rhetoric. Last year, the Economist Intelligence Unit ranked Ireland 10th out of 82 countries in respect of business environment, naming it one of the most attractive business locations in the world. And only last month, the City of London Global Financial Centres Index ranked Dublin as the 13th most important international financial centre in the world, two places up from the previous Index, published in September 2007.
The International Financial Services Industry
The financial services industry, both international and indigenous, has played an extremely important role in the success of the Irish economy over the last twenty years. Most of the global household names in banking, insurance and investment now have significant operations in Ireland. They make an extremely important contribution to job creation and revenue growth. The international financial services industry in Ireland is responsible for giving high quality employment to approximately 25,000 people and, last year, generated corporation tax of more than €1 billion for the Exchequer.
The Government has invested heavily in delivering the structures and supports that this key industry requires. In 2006, my Department published a detailed strategy, “Building on Success”, for the future development of the international financial services industry. We are confident that the educational, regulatory and marketing initiatives we are currently undertaking will help to attract further international investment and will also support our indigenous entrepreneurs.
Insurance Industry
I would like to emphasise the importance of a strong, vibrant and competitive insurance industry for Irish economic growth and development. It underpins so much of what we do on a day-to-day basis, by facilitating the transfer and effective management of risk and by doing so, encouraging innovation - the key to developing a high performance economy.
As an employer, the insurance/reinsurance industry makes a very important contribution to our economy and to our International Financial Services Centre. Ireland is now a leading location for more than 70 international insurance companies operating across four major business lines - life, non-life, reinsurance and captive insurance. One of Ireland’s great strengths - something not shared by many of our competitors - is the sheer breadth of international financial services business here, covering, as it does, banking, treasury funds and both life and non-life insurance.
Key Messages
I would like to take the opportunity today to make the point that, while the industry’s traditional focus has been Europe, closer attention also needs to be paid to investigating potential new market opportunities elsewhere, particularly Asia-Pacific. I was recalling only last week that there was some surprise when, a number of years ago, I directed that we should develop an Asia strategy. I continue to believe that we must respond to the growing importance of the Asian economy. There are big opportunities out there.
I also believe the insurance industry needs to form a view in relation to its skill requirements and research needs and to work with the IDA and others to address these needs.
Solvency II
I would also like to say a few words about the the Solvency II Directive proposal. This is one of the most important issues for the future of the insurance industry. I understand it has been the subject of discussion earlier in your conference.
A Solvency II Working Group, comprising representatives from industry, the Financial Regulator and the Department of Finance, has been working closely since May 2006 to ensure that Ireland’s broad interests in this area are best represented at EU level.
I would strongly encourage the continued engagement of the Irish insurance industry in informing and shaping Solvency II through inputs to the Solvency II Working Group and to the Commission’s quantitative impact studies. This will ensure to the maximum extent possible that Solvency II reflects the needs of our insurance industry.
EU Reform Treaty
Before I leave you today, I would just like to briefly touch on the subject of the EU Reform Treaty. EU membership has been massively beneficial and greatly influential in many facets of our economy and society - providing significant funding, improving working conditions and opening up trading barriers and increasing market access through the Single Market. EU membership is, and will continue to be, crucial to Ireland’s well-being.
The Reform Treaty will not only improve the way the Union functions but will support and sustain economic growth, create and protect jobs, promote international trade and environmental sustainability and speed up decision making. I know that I do not need to emphasise to a group like this how important our membership of the Union is to economic prosperity. However, I would like to take the opportunity to encourage the locals amongst you to become actively involved in the debate on the Reform Treaty.
Conclusion
In closing, I would like to congratulate Eamon O'Brien and his team for all their work in putting this Forum together and to wish you well with your deliberations. Every success to you all for the future.
ENDS