The aims and achievements of DIMA.
Against a backdrop of extremely testing conditions throughout the world's non-life insurance markets, the international segment of the Irish market appears to be faring relatively well. The members of the Dublin International Insurance and Management Association (DIMA) seem, to varying degrees, to be coping with the first soft market in the short history of most of their companies. The unfortunate combination of claims inflation, the frequency and intensity of catastrophes, fierce competition, deregulation and consolidation has clearly resulted in disastrous results for many participants in the non-life industry around the globe. While perhaps not yet a crisis, the current environment clearly threatens the stability of the sorts of pricing and terms most clients desire, as well as undermining the return on capital calculations of CFOs.
During these turbulent times, the Dublin market has benefited from an industry profile more and more resembling that of Bermuda. This diverse spread of niche activities and exposures has resulted in less volatility in our members' results than has been seen elsewhere, although clearly some have suffered considerable reductions in profitability.
When the International Financial Services Centre (IFSC) was opened in 1987, the original focus was to develop a captive insurance industry to serve the European risk management community. This aim has long since been widened to include significant operations of the major finite reinsurance players and the European divisions of the major liability insurers. Recent years have seen this base of activities expanded both in terms of core activities and the geographical spread of ownership and business covered.
The presence of some of the most influential Japanese insurers, the latest wave of Bermudian incorporations and an ever-increasing body of the major European industry participants indicates that the overall environment in Dublin remains attractive. Added to that, a growing involvement in the area of securitisation and potentially a more responsible pricing environment give encouragement that the size and health of the market will continue to show favourable trends.
Historically, DIMA's role has been to act as a forum through which issues facing its members could be communicated and appropriate actions taken to attempt to improve the business environment. Such issues would have covered wide-ranging topics such as the application of Irish corporate taxation, office rentals, reinsurance regulations and the enactment of securitisation legislation. As the association continues to expand, it will undoubtedly widen its range of activities in support of its members. The development of appropriate training programs in co-ordination with the Insurance Institute of Ireland, overseas conference representation, hosting a biannual conference and developing its website (www.insuranceireland.com) are current examples of this trend. As with both London and Bermuda, the close physical proximity of DIMA's members makes this communication and co-ordination effective.
The attractions of Dublin are varied, as industry surveys have shown. Access to the European market, involvement in the eurozone, English speaking, low tax, responsive regulatory environment, highly competent professional advisors, first-rate golf courses seem to cover the most obvious. On the downside, the rapid growth of the Irish economy has undoubtedly reduced the advantage of Dublin from a cost viewpoint versus London and Bermuda. However, this salary inflation has resulted in a greater internationalisation of the workforce as salary levels and the personal tax regime make it easier to attract foreign nationals without disrupting local wage scales. The added variety and experience this brings to our members' business can only help the prospects for a healthy future.
The impact of the eurozone has had limited knock-on effects on the industry, although undoubtedly it has resulted in administrative efficiencies in reducing the strain of managing currency exposures for those with a broad spread of geographic clients or policyholders. Arguably the introduction of euro notes and coinage in 2002 will add to the case of conducting business within Europe.
On the regulatory front, the first steps in preparing for the eventual introduction of a pan-European regulatory model for reinsurance have been taken. An increased vigilance by the Irish authorities in ensuring that appropriate corporate governance and professional qualifications are present in newly-formed reinsurance companies will hopefully result in Ireland in future being free from major scandals. Nonetheless, it is clear that in the market conditions we currently enjoy no regulatory regime will guarantee against insolvencies occurring, but strong corporate governance can help avoid abdications of management responsibilities.
As the Dublin market continues to expand it will hope to play its role in cultivating a healthy and vibrant worldwide industry with its various segments committed to providing value to their clients. The Dublin 2001 New World Old World conference showcases certain segments of the Irish market, looking at significant issues we face today. I hope the conference will prove as successful as the 1999 gathering and will give us encouragement that such future events are needed and can be accepted against other choices for the attendees' time and expense.