Ladies and gentlemen,
It’s a pleasure to join you today. I would like to thank BIPAR for organizing yet another great mid-term meeting, and especially for doing it here, in Frankfurt, and with EIOPA.
As we gather here today, I would like to begin by referring to the vital role that insurance intermediaries play in our industry. While some could still see intermediaries primarily as the distributors of insurance products, the reality is far more nuanced – and far more impactful.
Intermediaries are trust advisors – the experts who bridge the gap between consumers and the often-complex world of insurance. Your work goes beyond closing deals. You ensure clients understand their needs and make informed decisions.
Today – just as they did in the past – European consumers turn to the insurance sector for protection against major risks, relying on it as a pillar of stability in uncertain times. Yet, the dynamics we – as insurers, agents in distribution, and supervisors – must navigate to meet these expectations have evolved significantly.
From the escalating threats of climate change to the rapid pace of digitalisation, and the new geopolitical and economic environment, the challenges we face are no longer straightforward. The risks are bigger, the stakes are higher, and the solutions are anything but simple. As the world evolves, so do consumer needs and expectations. Their demands are broader – and more intricate – than ever, requiring us to adapt, both in what we offer and how we deliver it.
In this ever-changing landscape, your role as intermediaries becomes even more essential.
[Why fostering trust is essential]
Consumers rely on you to support them at every stage of their insurance journey – from the initial consultation to claims resolution. And this trust is key to the success of the insurance sector. But trust is also fragile. It can be shaken by misinformation, overly complex language, unclear product offerings or poor financial advice.
If trust were to erode, coupled with limited access to products and financial literacy, it could make consumers less inclined to buy insurance. This, in turn, could translate into growing protection gaps that exposes individuals and the broader society to greater risks and economic losses.
Let me illustrate this with an example:
Between 1981 and 2023, natural catastrophes resulted in around € 900 billion losses with the EU. One-fifth of these losses occurred in just the last three years underscoring the strain climate change is imposing on our societies. Yet, only about a quarter of the losses from extreme weather and climate-related events in the EU were insured, and this share is declining over time.
In these times of high risks and uncertainties, you – as intermediaries – are uniquely positioned to help reduce the protection gap. By raising awareness, guiding consumers through coverage options and exclusions, and fostering an environment that encourages meaningful conversations about protection, you break down barriers and empower consumers to make informed decisions.
And just as trust is key to the success of the insurance sector, it is equally essential to building a prosperous European Savings and Investment Union.
European citizens hold, collectively, around € 33 trillion in savings – more than twice the annual economic output of the entire Europe. Yet, nearly 40% of these savings remains in cash or bank deposits, generating minimal returns for savers and doing little to support the broader economy.
For citizens to confidently move around their savings and invest them in more productive investments, including insurance products, they need to have confidence in the options available to them – and in the insurance sector more broadly.
Unlocking even a fraction of these funds and channeling them into financial products could provide vital financing for innovation and sustainability while offering higher value for citizens – be it returns, protection, or retirement income.
[The challenges ahead of us]
For this, we need an insurance industry that is robust, resilient, and ready for change – capable to evolve to address the critical shifts already underway.
Today, with you, I would like to highlight a challenge that is rarely discussed. One that may not grab headlines or demand immediate attention, but its consequences could reshape the very fabric of our industry: I am referring to the ageing workforce of insurance intermediates and the challenges of succession within the distribution channels.
The insurance sector, like other sectors, is undergoing a demographic shift, as a significant portion of its workforce nears retirement. With them, decades of expertise, relationships, and institutional knowledge will be lost. At the same time, the new generations often perceive the insurance business as less attractive compared to other industries.
Against this backdrop, let me ask: how will insurance intermediation evolve in the future? Who will carry the torch forward?
Let me pose a few reflections to you:
- Consolidation
Demographic shifts in the insurance workforce may lead to a trend we have already begun to observe: an increase in consolidation. For smaller agencies or firms struggling to fill vacancies or retain competitive expertise, merging with larger players may not just be an option – it may become a necessity.
But what does this mean for consumers? Larger firms often bring economies of scale, cutting-edge technology, and broader market reach. However: could consolidation result in less choice for consumers, or a loss of the individualized service that defines our sector? What impact will this have on small or very small companies that serve the most remote areas? Can we create a healthy, dynamic market where competition thrives, while ensuring that clients remain at the hearts of our efforts and enjoy their “freedom to stay”?
- Artificial intelligence
At the same time, AI is transforming the insurance industry. With the rise of online distribution, comparators, and apps, coupled with a myriad of InsurTech start-ups, one must ask: is insurance intermediation fated to the destiny of being a “middleman”, with an office on the corner of the street, waiting to be replaced by digital alternatives?
In some circles – and I am being provocative here – it has long been argued that the end of insurance intermediaries is only “a matter of time”.
AI offers tools that streamline processes, analyse vast amounts of data, and can make our work more efficient and precise. However, can algorithms completely replace the human connection – the empathy, the intuition, the trust – that intermediaries bring to their clients? Also, can we really count on an entire new generation preferring online channels over in-person communication, for all insurance services? Or is it more a matter of how to adapt intermediation approaches – including through AI-based tools – to meet the expectations of the new consumers?
The final question is, how can we leverage AI to enhance – not replace – the trust we’ve spent decades building?
- Attracting new talent
In this mosaic of changes, attracting the next generation of talents is crucial for the future of the insurance industry. Younger professionals, more attuned to technological innovation, are essential to navigating these transformations. But this generation is looking for more than a job – they want careers that align with their values, offering purpose, innovation, and flexibility.
How can we demonstrate that insurance is an industry that evolves with the times? How can we highlight that a career in insurance offers the opportunity to make a meaningful impact on people’s lives? What steps can we take to ensure the next generation inherits the trust, expertise and relationships that define your work? And how can mentorship programs, with a focus on diversity and inclusion, help bridge the gap between experience and new perspectives?
***
Ladies and gentlemen,
We might not have all the answers today. And that’s okay. What matters is that we’re reflecting, that we’re ready to ask ourselves the tough questions, and that we’re willing to adapt and grow.
I am an optimist: I believe that the challenges we face today are not roadblocks. They are opportunities to reimagine what’s possible. They’re a chance to rethink what we do; how we connect with consumers, and how we build a resilient, forward-thinking industry.
As we move forward, I also believe there will be ample room for both small, independent intermediaries and large, consolidated players to thrive. Each brings its unit strengths to the table: the personalized touch of the former and the scale and larger resources of the latter. However, leveraging the benefits of digitalization will undoubtedly be essential and a must for all. Rather than replacing human expertise, AI and digital tools should enhance it – enabling intermediaries of all sizes to offer tailor solutions and guide clients with clarity and confidence. And as the world grows more complex one thing will remain constant: the need for sound, informed advice that truly resonates with clients navigating these new times.
[Seizing opportunities]
As we embrace these shifts, we also find ourselves in a position to seize opportunities. The changes happening in our economy, in technology, and in consumer behaviour do not pose only challenges – they open new avenues to better serve consumers and meet emerging needs. Today, we are called to look beyond the “traditional” and adopt a broader vision of what insurance can achieve.
- Natural catastrophe insurance
Let me continue with the example I mentioned earlier about one of the most pressing issues of our time: climate change.
We’re all witnessing how natural disasters – floods, wildfires, hurricanes – are becoming more frequent and severe. Extreme weather events have already claimed lives and caused significant damage to properties. Consider the devastating floods in Valencia, where torrents piled cars atop one another and tore houses apart, underscoring the urgent need for action.
To mitigate the economic impact of natural catastrophes and build a more resilient society in the face of escalating climate-related risks, a key priority must be increasing the pooling of private risks. Encouraging private insurers to expand their coverage for natural catastrophes will be essential in making insurance more accessible and affordable for consumers. And this effort starts with you—the insurance distributors.
There is encouraging progress, as reflected in growing consumer awareness. According to last year’s consumer trends report, more people are considering purchasing products with sustainable or ‘green’ feature. In 2024, 16% of consumers expressed interest in such products, up from 13% the previous year. Additionally, 30% of consumers in 2024 were eager to learn more about these products, compared to 27% in 2023. This shift in mindset towards sustainability and long-term resilience is a step forward. We must seize this momentum, turning challenges into opportunities to empower consumers to build more secure, resilient futures.
- Cyber Insurance and the digital imperative
Risks are not confined to the physical world. As digitalization accelerates, a new frontier of challenges and opportunities continues to emerge.
Cyber threats have grown in both frequency and complexity. From small businesses to multinational corporations, no one is immune to data breaches, ransomware attacks, or system outages.
The impact of cyber risks doesn’t end in the digital realm. Imagine a hacker manipulating a home’s fire protection system or disabling a company’s supply chain. The potential for harm is very real, which is why cybersecurity insurance is no longer a niche offering. Yet, the insurance protection gap, also in this area, is substantial.
This presents a unique opportunity for intermediaries to educate customers about these risks, demystify complex coverage, and ensure policies meet the evolving needs of businesses and individuals navigating the digital age.
At the same time, the digital age is shaping how consumers perceive the insurance experience. Investing in a modern customer experience is already critical. This means offering online access to insurance policies, providing platforms to digitally file and manage claims, and ensuring the entire journey - from policy purchase to renewal - is smooth and intuitive.
A fully online intermediation model, combined with personalized service, could help intermediaries capture these digitally savvy customers. By fine-tuning the customer journey, one does not only enhance satisfaction but also can build lasting loyalty in a competitive market.
- Health insurance
Further, let’s not overlook the growing importance of health and wellness insurance – a need brought sharply into focus by the global pandemic. The crisis forced us to confront the fragility of our health, and for many, it underscored the need for adequate financial protection.
Today, the conversation extends beyond traditional health coverage. Wellness-focused products are gaining traction, offering incentives for healthy living, providing mental health support, while integrating seamlessly with wearable technology. These innovations go beyond protection – they actively promote preventive care and healthier lifestyles.
This shift represents a valuable opportunity for intermediaries to guide consumers in selecting policies that not only address their immediate needs but can also contribute to building personal and societal resilience in an increasingly unpredictable world.
The evolving insurance landscape is no longer just about managing risk – it’s about driving progress toward a more resilient and sustainable society. When we offer climate-resilient insurance, we support sustainable development. When we protect businesses against cyberattacks, we empower them to innovate with confidence. And when we provide health and wellness coverage, we help create healthier, more secure communities.
- Pension saving products
Alongside efforts in these areas, there’s another crucial one in securing long-term financial well-being we cannot neglect: pension savings. This isn’t just about contributing to the broader goals of the Savings and Investments Union – through that’s important too, as I mentioned earlier. It’s about ensuring that EU citizens have access to the financial security they need in retirement.
Europeans are living longer, and as a result, our pension systems are under increasing pressure. Today, one in five people is at risk of poverty or social exclusion in retirement – with women being particularly vulnerable and facing a pension gap over 30% larger than men. If we don’t address these challenges, the pension gap will only continue to widen.
Indeed, looking at the demographic trends, there are currently about 2.8 people of working age for every pensioner. By 2070, that ratio will shrink to just 1.7. This means fewer workers contributing to state pension systems, making it harder for public schemes to keep up. As a result, Member States face a major challenge: providing citizens with adequate retirement income while maintaining sustainable public finances.
Many Member States have already taken measures to make future public finances more sustainable. However, according to the European Commission’s 2024 Ageing Report, the public pension replacement rate – the proportion of an average wage that retirees receive – is expected to decline from 45% in 2022 to just 38% by 2070. This is the reality: relying solely on state pensions will be, by no means, enough. EU citizens need supplementary ways to save for retirement, including workplace pensions (Pillar 2) and individual savings plans (Pillar 3).
This is where pension savings products, like the Pan-European Personal Pension Product (PEPP), come in.
In the broader discussions about long-term investment products or individual savings account products, I would like to stress that any products with retirement needs in mind shall have certain characteristics, which are essential to address the pension gap. I am referring to the illiquidity, the accumulation/decumulation phases, the flexibility to cater for career breaks, the portability from job to job and country to country, and finally allowing for tax-advantaged contributions.
The PEPP has all the key features for a good retirement product, but it also has others which limit its attractiveness, resulting in a limited uptake. The reasons for this lie on both the supply and demand sides. On the supply side, for instance and to give you some numbers, at the end of 2023, there was only a single PEPP provider, distributing the product in Croatia, Czechia, Poland and Slovakia to fewer than 5,000 PEPP savers. On the demand side, consumer awareness is still low – 76% of EU consumers who responded to EIOPA Flash Eurobarometer survey reported they had never heard of PEPP.
For PEPP to truly succeed, we need greater ambition. For this, we strongly believe that a revised PEPP can substantially contribute to address the growing pension gap.
Here too, you are in a unique position as intermediaries to raise awareness not only about the growing pension gap but also about the pension products available, offering expert guidance and support citizens to become better prepared for their future.
[Value for money]
As we take action on these fronts – from climate-resilience to pension savings and everything in between - delivering products that provide real value to consumers remains paramount. This brings me to the final point I wish to address today – the imperative of ensuring value for money.
For consumers, value is rooted in the balance between the benefits – returns and services – provided by a product and the costs incurred. Consumers also want products that are transparent and easy to understand, especially when it comes to navigating trade-offs like safety versus returns or liquidity versus long-term growth. Yet, the market still harbours products with little value, that erode trust and confidence.
It’s telling that only 45% of European consumers believe their insurance-based investment products provide value for money, whereas this figure increases to 50% for personal pension products. Even more concerning, 17% of EU consumers have hesitated to purchase such insurance-based investment products due to doubts about their worth. This figure increases to 19% for personal pension products. To rebuild trust and foster confidence, consumers must be at the core of the entire product lifecycle – from design through to distribution. This can be achieved by enhancing transparency, ensuring that costs are aligned with the benefits provided, and removing “the bad apples” from the market which undermine the reputation of the entire sector.
As you know, value for money – and its oversight – has been for EIOPA a long-standing priority, even before the Retail Investment Strategy came into focus. In EIOPA’s view, European supervisory benchmarks are pivotal to driving this change. With nearly one-third of consumers expressing dissatisfaction with the value they receive, these benchmarks are essential for supervisors to engage with industry and – by adopting a risk-based approach – focus their efforts on products that require closer scrutiny. To this end, EIOPA has taken proactive steps, by working on a revised methodology on value for money benchmarks for unit-linked and hybrid insurance products, while also conducting a data pilot exercise.
Ultimately, these discussions will be pivotal in realizing the full potential of the Single Market and bringing the Savings and Investment Union to life. In a well-integrated market, consumers should face similar costs against the benefits offered by products with similar characteristics.
In an industry built on promises – to protect, support, and rebuild – the perception of value is everything.
[Conclusion]
With this in mind, I will conclude.
Walt Disney once said: "Many of the things that seem impossible now will become realities tomorrow." When surrounded by risks and uncertainties, as we are now, imagining how potential opportunities can be transformed into realities can be challenging.
Today we may not have all the answers, but there is one undeniable truth: intermediaries are, and will remain, a cornerstone of our industry. Let us then move forward together with a shared vision: a resilient, innovative, and trusted industry that places the needs of our consumers at its core.
I look forward to your questions and I wish you already a very insightful day with so many more interesting topics on the agenda.
Thank you.
Details
- Publication date
- 30 January 2025