POLICY - May 2019

POL I CY The Israeli Insurance , Pension&FinanceNewspaper 8 Tel Aviv Re 2019 Hillel spoke with us about Swiss Re’s activities in Israel, his views on the global and the Israeli markets and the driving forces shaping work relations between insurers and reinsurers. Swiss Re’s value proposition is to offer localized expertise supported by the Group’s solid risk knowledge acquired over 155 years of global operations. Born and raised in South Africa, Damelin is a qualified actuary, holding particular interest in public policy, philosophy of economics and the interplay between regulation and the markets. After some years working with pensions in South Africa, he moved to Israel in 2016, driven by a strong desire to contribute to the nation and to take part in the socio-economic project of rebuilding Israel. Hillel is overall fascinated by the economy and how it evolved over time, linking it back to discussions in the Talmud in this context. In his spare time, Hillel enjoys cycling and dedicates time to supporting the Alyn cause. • What are your views on the Israeli insurance market? The Israeli market is sophisticated, well developed and generally competitive. It offers a world-class range of products and features, with high market penetration driven by regulation, education and, of course, distribution. Agents heavily dominate distribution in the Israeli insurance market, and account for the vast majority of the volume. The industry has thrived on the back of the strong collaboration between insurers and agents. In the last decade, as a number of direct writers entered themarket, traditional insurance companies started to flirt with direct distribution, with varied degrees of success. Most recently, the emergence of new direct digital players, in various guises, has forced established insurance companies to rethink their distribution strategy and to improve their ability, and the ability of their agents to compete. This shift is not devoid of conflicts; but the new reality seems to have been accepted. New hybrid models are emerging, as companies seek to differentiate. More generally, Israel has embraced technology disruption, emboldened by its noteworthy tech strength. With capital to invest and high exposure to disruption, insurance companies are constantly seeking the next new edge. Swiss Re is at the forefront of such developments. • What about Regulation? Regulation is a subject on which all industry stakeholders have a strong opinion. In my view, regulation is a mixed blessing. On the one hand, it has certainly required a lot of resources and stifled innovation, as the industry had to allocate resources to governance and management rather than customers; and it generally affected profitability. On the other hand, many of the reforms are consumer centric and should probably have been initiated by insurance companies. The introduction of Solvency II and IFRS were both inevitable and beneficial in their own ways. Internationally, the cost of capital has long been a core component of pricing, and Solvency II has forced the local industry to consider it more seriously. Regulation is not going away, though, and further regulatory requirements are expected, for example the implementation of IFRS 17 and the Solvency Pillar II and III. Regulatory burdens limit new entrants and favour incumbents. I like to dream of a world with a far more Miltonian approach, but, practically, I prefer to think at the margin. I mean, when I discuss regulation with the Ministry of Finance or with my clients, I like to talk about the marginal impact of the next piece of regulation and its contribution to thebodyof regulation. I’m concerned when people think of regulation as a tool to “fix” things; like any “chumra”, there’s always an unintentional “kulla”. This is, in part, a result of the dual role played by the Commissioner as both the regulator and ombudsman. • How important is Digital in the global re/insurance market? Technology is one of the main trends driving transformation in the industry. It’s changing the way insurers work and engage with customers, who increasingly demand applying global expertise to a burgeoning insurance market Poli cy conversation ‏ with Hillel Damelin, Head L&H Medi at Swiss Re Israel OLICY Hillel Damelin, Head L&H Medi at Swiss Re Israel