A new report by PwC, entitled ‘Creating the Future for Insurance In Ireland’, which was commissioned by Insurance Ireland, forecasts the creation of an additional 3,000 jobs in the sector over the next five years, accompanied by the opportunity to invest circa €1bn in Irish infrastructure projects for the benefit of Ireland’s long term growth.
The recently announced Ireland Strategic Investment Fund could provide opportunities for appropriately targeted investment in infrastructure projects. PwC state that the insurance sector can play a key role in the vital areas of Pensions and Healthcare. The report states that Insurance companies are ideally placed to provide the future solutions to replace the traditional sources of pension. Given the right initiatives from the sector, the report believes the size of the annual pensions gap in Ireland could be reduced by 30%. On the Healthcare front, it is estimated that the number of private healthcare consumers could be increased by up to 10% bringing the total to 2.2 million customers over the next 5 years.
The report further states that:
-approximately 27,000 people are already employed in the insurance sector in Ireland, with 14,000 of these employed directly by insurance companies and an additional 13,000 employed by companies directly related to the industry e.g. outsourced professionals and service centres, financial advisors, consultants
-Insurance companies in Ireland have just under E200bn of assets under management for policyholders. Of the total insurance assets, E46bn is invested in Ireland, of which E16bn is invested in Irish government debt and E19bn in Irish companies and property
-One in every four persons working in financial services in Ireland is employed directly or indirectly by the insurance industry.
The PwC report also states that the Irish insurance sector contributes over 4% of total net tax receipts, with insurance companies paying a range of taxes and levies, including corporation tax, taxes on income of employees, VAT and insurance and pension levies. The total tax payments by the insurance sector are estimated at E1.6bn.
Speaking about the report, Michael Noonan, Minister for Finance, said “I welcome the Insurance Ireland Report. It takes a comprehensive look at where the Irish insurance industry is at and clearly documents the opportunities and challenges that lie ahead. While the Report represents a roadmap for development of the industry, its specific proposals, with a top 10 list of action points, focus on delivery.”
“The Report comes at the right time,” said Minister Noonan, “and fits in with the Government’s Medium Term Economic Strategy for the period 2014-2020 launched last December where we set out our ambition of developing a more diversified, competitive and responsive financial infrastructure that can finance growth across the economy. It sends out a clear message that the Irish insurance industry is ready to contribute with optimism to creating the appropriate economic and investment finance conditions that will put Ireland to the forefront as a desirable start-up location both for foreign and home-grown enterprises and to be in a position to take advantage of the improved economic conditions that we all look forward to in the years ahead.”
Commenting on the report the chief executive of Insurance Ireland, Kevin Thompson, said “This report highlights the significant role which the insurance sector plays in the Irish economy. Our goal now is to take our contribution on to another level and the vision of the sector as set out in the PwC report clearly demonstrates our ambition and our commitment. We believe our ambition to add 3,000 high quality new jobs in our sector over the next five years is a very realistic target. We now have a strategic framework which allows us to collaborate more effectively with our key stakeholders with consequent benefits for both the sector and the economy. One of the stakeholders we have developed deeper links with is the IDA, and we look forward to collaborating with them both in developing FDI opportunities for Ireland Inc. and in exploring technology partnerships for the insurance innovation ambition as outlined in the report. As a sector, we are inextricably linked with key aspects of Government policy particularly in the areas of healthcare and pensions. On the general insurance front, both domestically and internationally, we are an essential enabler of business and a support across the broad range of everyday economic activity.”
The report states that Ireland’s insurance sector has clear advantages relative to competing jurisdictions, including the quality of our people, the business friendly environment, a low and stable onshore tax regime and an improved competitive cost base. The report advocates the promotion of Ireland’s advantages on an international basis, in Europe as well as the US and Asia. The report recommends that a high level group of senior insurance and government representatives should be established with a strong mandate to develop Ireland’s reputation internationally, encouraging overseas companies to locate here and build on existing investments. These activities should be co-ordinated with those of the IDA and resourced effectively, with ongoing measurement against clear targets. Similar initiatives are being put in place by competing jurisdictions and Ireland needs to be proactive in promoting its advantages. The report is very confident that given the right set of actions by the sector and Government an additional 3,000 high value jobs can be created in the sector over the next 5 years.
Creating the Future for Insurance in Ireland’ says Ireland can be developed as a global centre for insurance innovation by collaborating with the IT sector. There is evidence already of successful innovation centres being established in Ireland, e.g. AON and Zurich, as well as others in the pipeline. These have generally been set up by organisations with an existing presence in the country. Established multinational companies already operating in Ireland should be targeted as a priority to locate innovation focused activity in Ireland. The report believes that Ireland can gain traction as a centre for innovation, with consequent wins of service centres and centres of excellence.
The PwC Report also advocates the delivery of a new Charter for Irish Consumers, stating that the domestic insurance industry in Ireland has a relatively low profile with consumers and the breadth of its activity and contribution is not well understood. A new Charter for Irish Consumers could focus on urgent reform of the pensions and private health insurance regimes, seeking to facilitate improved private provision in both cases, with clear benefits to the State and the consumer. The industry can also play a bigger role in the Irish economy by investing some of its assets in the development of national infrastructure.
PwC was commissioned by Insurance Ireland to prepare an assessment of the current position of the insurance industry in Ireland and through the identification of challenges and opportunities, to generate specific policy proposals aimed at improving its positioning and prospects. The review was required to cover the domestic and international life, non-life and reinsurance markets. The key focus in seeking opportunities to develop the market is on the generation of increased numbers of jobs, taxation revenue, and on consumer outcomes in the domestic market.
|
