Members of the IFoA’s Policy Team talk about the areas they are currently focusing on, and how they are influencing public policy for the better
Matthew Levine has been a policy manager at the IFoA for six years and looks after policy projects related to investment and risk management.
Infrastructure is currently a high-profile subject: in his March Budget, the Chancellor announced a £600bn programme of public investment to be spent during this Parliament on housing, transport and broadband, and there is speculation about the creation of a national infrastructure bank. I have worked with the Infrastructure Working Party over several years on issues such as how to increase institutional investment in infrastructure. Currently we are focusing on resilience; a policy briefing was published in the spring and we are engaging with the National Infrastructure Commission, which is leading this debate.
Infrastructure is an example of an illiquid asset. These offer advantages for long-term investors but can be difficult to price or trade at short notice. I recently worked with the Finance and Investment Board on a webinar looking at how to tackle barriers faced by potential investors. Solutions to these problems could enhance the options for investing the growing sums held by defined contribution plans.
During the past year my colleague Catherine Burtle and I have focused a lot of time on the Great Risk Transfer campaign, which seeks to understand how large financial institutions have been transferring risk to consumers in areas such as pensions, insurance, work and health. We’re interested in the consequences for individuals, and in solutions. We were heartened by the response to our call for evidence in the spring. Now our focus is to distil the evidence into workable policy proposals and raise these with decision-makers such as MPs and regulators. I’m hopeful that a combination of robust evidence and thoughtful analysis will prove influential.
Steven Graham is a technical policy manager in the Policy Team, where he’s worked for almost six years. For the past few years he has focused on working with the IFoA’s volunteer communities in life and general insurance.
At the start of 2020, fair insurance pricing, treatment of vulnerable customers, insurance in the digital age and Solvency II post-Brexit were keeping myself and my Boards and Committees busy. However, COVID-19 has since had a direct bearing on our work and on what the Policy Team needs to focus on. We have been following impacts on business interruption, travel and other forms of insurance, together with the market, reputational and other risks that have crystallised. Working with the IFoA’s COVID-19 Action Taskforce, we have met with UK regulators to discuss our concerns about COVID-19’s public interest impacts on insurance and investment. More regulatory discussions are in the pipeline.
Rather than making issues such as fair pricing, digital distribution and Solvency II design less relevant, COVID-19 has thrown them into focus. My colleague Faye Alessandrello and I are working with members and external stakeholders to produce bulletins on inclusive insurance. These will showcase a range of perspectives on the importance of inclusive and available insurance – particularly as we navigate the ‘new normal’. The first bulletin was published in July and can be found at bit.ly/3k9UNDt.
With the end of the Brexit transition period on the horizon, we also expect to be busy working with volunteers on the Treasury Review of Solvency II. We will consider the future of the UK’s insurance regulation from a public interest perspective, but also reflect on the Solvency II experience since 2016.
Faye Alessandrello has been a policy manager with the IFoA for the past two years. She has led on campaigns such as the IFoA’s Sustainable Development Goals campaign, and works with members to develop and promote IFoA policy positions.
The growth of green finance in order to accelerate the transition to a net-zero economy is a priority for government. Actuaries and the financial sector have a role to play in mainstreaming climate and environmental factors in their work. Working with the Sustainability Board, we have met with Treasury Select Committee staff to discuss and shape the future of its inquiry into green finance; the IFoA has also signed up to the Green Finance Charter. As countries rebuild their economies post-COVID-19, green finance will be more important than ever.
Another priority is social care funding. Actuaries have a role to play in offering their perspective on long-term funding solutions. In July, the UK government announced a proposal that would see those aged over 40 contribute to the cost of care in later life through increased tax or national insurance. As this work progresses, I will work with the Health and Care Board and the Mortality Research Steering Committee to help shape the government’s plans.
As mentioned, Steven and I have been delivering a campaign on inclusive insurance. I am also delivering a research project examining the poverty premium in the UK insurance sector. The research, delivered with Fair By Design, is being informed by consumer and industry experts, including IFoA members. The insights of actuaries working in the insurance sector will facilitate greater understanding of the causes of the sector’s poverty premium, and will also help identify solutions. The final report will be published later this year.
Catherine Burtle has been with the IFoA for five years and has worked across various policy roles, most recently as policy manager for pensions.
Pensions is probably the area of public policy where the IFoA is most well-known, and recent reforms mean that there have been ample opportunities for actuaries to influence the agenda, as policymakers grapple with how to ensure people can fund their retirement.
I work with the IFoA’s Pensions Board on issues across defined benefit (DB) and defined contribution (DC) pensions. In the DB space, the Pensions Regulator’s DB Funding Code consultation has been the focus during the past 18 months. In the run-up to the consultation we had meetings with the regulator to try to influence this regime’s direction, and published our formal response to the consultation in September.
Our themes in DC are adequacy of retirement savings and longevity risk, two issues that have been brought into stark relief with the decline of DB schemes and the introduction of automatic enrolment and the ‘Freedom and Choice’ agenda. These issues are also part of the Great Risk Transfer campaign. They represent a significant transfer of risk from employers and insurers to individuals, and actuaries have flagged this as a challenge that should be higher up the agenda of policymakers.
In the past year we have engaged with the Pension Schemes Bill that is passing through the UK Parliament. Among other things, the Bill legislates for pensions dashboards and collective money purchase (or collective defined contribution) schemes. I’ve been working with specialist working parties to influence how both aspects of the Bill develop and are implemented. We’ve done this through meetings and briefings with civil servants and parliamentarians, arguing that these could be valuable solutions in an uncertain pensions landscape.