ABI Annual Conference: Key takeaways
March 3, 2025
On 27 February 2025 we attended the ABI’s 40th Annual Conference. It was a full day of sessions with a wide range of speakers from inside and outside the industry. It was particularly interesting to see some new perspectives on how to focus on customers and deliver cultural change from those who have done it in other markets and other forums.
There was too much covered in the day to run through all of it here, but four highlights from the conference for us were:
Customer centric approach can pay dividends
In an excellent discussion with Octopus Energy CEO Greg Jackson the main focus was on how to focus more on the customer experience and how that can be enhanced with technology. There are similarities between energy and insurance. Both are necessities, and neither are ‘exciting’ purchases with limited differentiation other than on price. Despite this, Octopus has generated real customer loyalty by improving the experience for its customers.
One example that really hit home for me was simply embedding customer bills into their monthly emails, rather than asking them to click a link to then log in to the website. It is easy to see how this is better for the customer, but it is also better for Octopus. Bad debt rates are at half the industry average, in part due to customers being aware of what they owe each month. Insurers can often fall into the trap of building a product first and then trying to sell it to customers. There are gains to be made by first understanding what customers need and then building the product for them.
AI needs safety controls and green energy
During a brief but balanced presentation on AI, Dr Stephanie Hare explained how AI can be great but it needs regulation to make sure it is safe. Would you like to travel on a plane that hasn’t passed safety checks? Me neither.
Dr Hare also highlighted a couple of developments in the US. Firstly, AI is driving huge amounts of energy use, much of which is from fossil fuels. Indeed the amount of energy that is required for AI / data centres is so great that the big tech companies are investing in their own nuclear power plants. Corporations need to consider the environmental impact of AI use. Secondly, the new US administration is removing data sets from the internet, a worrying trend for any actuarial modelling at a global scale.
UK Motor claims are still a big issue
The topic of affordability of insurance raised its head again in a morning panel session. Allianz’s Colm Holmes reiterated the point that premium costs in the UK are primarily driven by high claims costs. As a major global motor insurer, Allianz has compared claims costs across Europe and the UK doesn’t come out well. The average cost of a collision in the UK is c£6k, in Germany it is c£3k and in Italy only c£2k. The frequency of soft tissue claims is also higher here than in Europe.
There needs to be a fundamental shift in approach to drive affordability, starting with an acceptable cost and working back towards what can be covered. This could even go as far as limiting liability on motor claims. However this would require new legislation.
Do we need a Motor Re, similar to Flood Re? Possibly, though it requires significant thought and societal debate regarding who it is for. For example, is it right to subsidise nurses who are currently penalised for working in remote locations? Probably yes. But what about the young male drivers whose premiums are high but who are also responsible for a high proportion of the most serious accidents? My colleague Chris Sandilands wrote about this a few years ago in the context of GIPP.
The FCA is looking to streamline regulations
Another interesting debate was around the role of regulators. There is a view from the US that all regulation is a hindrance to growth but this is not shared by the PRA and FCA. One of the reasons the UK is an attractive market for investment is its stability and safety that comes from a proportionate amount of regulation. It was refreshing to hear from the FCA that there is a process in place to remove some elements of regulations where they are clearly having unintended impacts. An example given was Consumer Duty regulations impacting some wholesale markets. This was not the intention of the regulations and so they will be changed. The PRA is also streamlining processes to help speed up approvals, for example Cat Bond approvals should reduce from six weeks to ten days.
The Oxbow Partners View
There was a common theme coming through many of the sessions. There are some significant changes going on in the insurance sector and wider society that need management time and attention. Many of these changes will require a change in mindset, for example putting the customer first and building a product based on their needs and budget. This will also lead to changes in operating models, strategy and technology requirements.
AI can be a driver of change, but it also comes with significant risks that need to be mitigated and controlled. There is an opportunity for insurance to be at the forefront both as a user of AI and as a potential arbiter of what ‘good’ AI controls look like.
About the author
Paul De’Ath leads Oxbow Partners Market Intelligence team. Prior to joining Oxbow Partners Paul spent nine years as an equity research analyst covering all aspects of insurance across the UK and Europe. He started his career as an accountant at EY and also spent some time in industry at Standard Life.
