Catherine Graham anticipates a continuing bright future for Dublin's re/insurance sector.
Two years ago, Global Reinsurance produced its first Dublin edition to coincide with the first international insurance conference to be held in the city. At that time, Dublin's international re/insurance community, in the guise of the Dublin International Insurance and Management Association (DIMA), had recently asked consultant Tillinghast-Towers Perrin to take a good look at its services and offerings, and provide a blueprint for Dublin's future growth.
The Industrial Development Agency of Ireland (IDA), the government body charged with marketing the country as a location for international business, responded to one of the suggestions by appointing a full-time international insurance representative, a role recently taken over by Catherine Graham. Other suggestions from the Tillinghast report included establishing the conference and for the re/insurance community to offer as wide a selection of risk-related products as possible.
This the sector embraced willingly. Most of the products proposed by Tillinghast are now routine offerings from the Dublin re/insurance community, though certain suggestions such as protected cell companies have not received regulatory approval. Whether that situation will change with the recently-announced shift in regulatory responsibility is unclear. Towards the end of February, the Irish government announced a new structure for financial services regulation in the country.
In many ways this makes sense. Under the current regime, regulation of the various financial constituencies is split between several different departments; insurers are overseen by the Department of Enterprise, Trade and Employment and financial institutions are answerable to the Central Bank of Ireland, while reinsurers have only recently been subject to what still amounts to the lightest touch of regulation. The government's decision to set up a new single regulator, the ‘Central Bank of Ireland and Financial Services Authority', reflects the slide towards blended risk products being developed by the re/insurance community in the city. The new regulatory regime should be in place next year, and will have sharper teeth than the current set-up.
Nevertheless, Dublin's approachable regulatory environment has been one of the attractions of the jurisdiction, and many within the city believe that the new regime will continue in this vein, rather than move to a more confrontational attitude.
Whether Dublin's re/insurance sector has reached a sufficient size to be perceived as an independent marketplace in its own right remains a moot point. Many Dublin-based re/insurance managers would argue that it is now a regular stop for brokers and risk managers, with sufficient capacity and enough of the big names in the reinsurance sector to keep most buyers happy. Nevertheless, none of the large international brokers have sizeable operations in the city, though Aon Re, concentrating on alternative risk transfer business, is a recent addition to the city's risk community and Guy Carpenter has a small operation.
What is of little doubt, however, is that Dublin is undergoing great change. The International Financial Services Centre (IFSC) started in the late 1980s as part of an European Commission-backed effort to kick-start Ireland's then sluggish economy, tackle high unemployment levels, and regenerate the neglected docks area. Just over a decade later, the economy is booming – to the extent that the EC has recently castigated Ireland over its economic policy – and the government is looking overseas to attract the people it needs to staff the swelling professional sector. Net immigration is the order of the day, with Dublin experiencing the sort of expansion that others can only dream of, and the IFSC proving a developer's dream. How long this lasts is, of course, the million dollar question, and pressures on infrastructure and housing in Dublin are manifesting themselves in ever-increasing traffic jams and house prices.
So far, the Irish have proved themselves more than able to deal with any potential barriers to growth. Ireland's success with the IFSC, which at inception had special dispensation from the EC to impose a 10% corporate tax rate on companies involved in international business, ultimately could have been its own undoing. But rather than trying to push the EC for continuing tax breaks – difficult to justify when the IFSC had patently succeeded in improving the economy and lowering unemployment – the government decided instead to lower the domestic corporate tax rate to 12.5%. The new rate kicks in at the beginning of 2003, but several international re/insurers have recently set up operations at the domestic rate, which is being reduced year on year.
Two years ago, Dublin's international insurance community was aiming to become the “Bermuda of Europe”. With several securitisations under their belt, on both life and non-life business, that aspiration seems several steps closer, and with newly-established Bermudian outfits such as Max Re setting up shop, the city is seen by many as one four pillars of the international re/insurance and ART community – Bermuda, New York, London and Dublin.
Now, however, Dublin wants to be seen as a centre in its own right, rather than a new version of an already-established idea. With the energy and innovation currently on display, it may just meet that dream.