The Chairman's Introduction

AILO's Background

The Association of International Life Offices is a unique organisation in the insurance industry representing a diverse group of companies in product, market and organisational terms and having criteria for membership that are borderless. The Association's origins were rooted in the provision of financial services to international expatriates; a group whose needs, by definition, lie outside the constraints imposed by indigenously based social security structures, currency restrictions and taxation systems. This demanding and geographically wide-spread market has posed, over the years, every imaginable challenge to our member companies, thus enabling them to gain invaluable experience in a wide range of product structures, methods of distribution, regulatory regimes, languages and cultures.

Subsequent Business Expansion

As anti-competitive barriers in many countries have gradually been dismantled, and the mobility of labour has grown exponentially through the globalisation of markets, the original ambitions of AILO's members have correspondingly expanded and the attractions of their products and services have influenced many domestic markets. As a result, the membership’s business is now conducted in Europe, the Middle East, Far East, Latin America, Africa and Australasia. Its customer base encompasses not only international and Euro-expatriates, but also the international business community and financial services consumers in a number of important European and other indigenous markets. Although there is virtually no qualification on the race, creed or residence of our insured investors they do tend to be bound together by such common characteristics as independence of spirit, self-responsibility, and a similar socio-economic profile.

Products, Services and their Distribution

Consequently, the design and scope of products available from AILO companies reflect the wide range of needs of such clients who, for example, can demand the provision of insurance protection, systematic savings, capital investment, pensions provision and investment diversity, either individually or in a combination of services. As a result, the membership supplies policy structures comprising of conventional insurances, universal life vehicles, unit-linked products, capitalisation plans and group life/pension schemes, besides frequently offering 'stand alone' mutual funds, asset management and trust facilities. The investments underlying these contracts must also cater for the complex needs of our policyholders and, hence, they run the gamut from government bonds to derivative funds. In between is a vast selection of investment vehicles, all designed to manage the individual risk profile of each investor and to modify that profile to constantly changing circumstances.
The methods of distribution used to access this disparate population are equally diverse, and naturally tend to be tailored to the economics of the size of the particular market being addressed as well as its servicing needs. The Association membership thus utilises a wide range of channels, the most popular being independent intermediaries of all forms, followed by tied agencies and direct sales forces, with some direct marketing. Each method is either employed as appropriate to the markets’ circumstances or in conformity with the insurers’ own distribution culture.

Our Protection Responsibilities

Providing for the financial well being of individuals and families carries with it an enormous responsibility, and the high standards established through the operating practices of our member companies are reflected in the Association itself. Whilst by no means wishing to seek a policing role in our diverse markets, AILO is naturally conscious of the need for a high level of investor protection, in all of its forms, as well as being aware of the potential danger of geographically distant operations being open to use for illegal purposes. Hence, the Association works closely with the insurance supervisory authorities in a number of key jurisdictions, constantly monitors consumer protection legislation, and has established membership standards in such areas as the prevention of money laundering, as well as having facilitated the exchange of information on the efficacy of the distribution side of our industry.

AILO Membership

Membership of AILO is not however a commercially inhibiting factor. Members remain competitive, entrepreneurial and aggressively focused on their objectives. It does however provide a high degree of reassurance to policyholders, distributors and regulators alike as insurers carrying AILO membership conform to a well defined code of standards and practices which have been formulated through their many years of combined experience.

...and its Future

Since its establishment, AILO has experienced both the historic reality of the European Single Market and the accelerating process of worldwide deregulation where fundamental and ongoing change is the order of the day. I sincerely believe that no association of insurers is better qualified to influence the practical implication of this change, better poised to seize its commercial opportunities, better able to serve the resultant needs of its financial services consumers or better qualified to protect their economic interests than is the membership of the Association of International Life Offices.

 

Alan Morgan-Moodie
Chairman