All change...

The panel
Martin Balch, FM Global

Roger Brookhouse, Chubb Insurance

Mike Cranston, Fortis Insurance

Claire Duggan, AXA

David Grant, NIG

Tim Jones, Accenture

Jenny Margetts, Royal & SunAlliance

Bill Marshall, CIS

Nick Miekle, Accenture

Jack Norton, Aviva

Jim O'Byrne, Accenture

Nigel Peaple, ABI

Steve Wright, AMP

Last week, prime minister Tony Blair came under pressure from one of the biggest businesses in his parliamentary constituency to join the euro. The company, Black & Decker, said that if the UK did not join Euroland, it would have to move its business.

It is this kind of pressure that is pushing the euro debate forward and in recent weeks, despite the efforts of Rik Mayall and Sir Bob Geldof, those in favour seem to be gaining the upper hand.

But what does the insurance industry think?

Insurance Times, in association with Accenture, held a round table discussion to find out. One key finding is that insurance companies have changed their perception of the euro in recent weeks.

Now it appears that companies are dealing with the issue of joining the euro on a when, rather than if, basis, and that it is time that some key strategic decisions were taken.

So we asked the panel: how will joining the euro affect your business?

Jack Norton, head of business change, Aviva:The impact of the euro will mean a huge amount of regulatory work - mandatory work - and not a lot of business benefit.

We are analysing every single field and every single process to identify the euro changes.

All we've instigated at the moment is a two-year analysis - an impact analysis that happened in 1999/2000. Since the merger we've left it alone. But we're beginning to wake up. We have a company assumption that there will be a referendum, in the middle of next year, in either May or October.

We are assuming a May referendum and we're assuming that if it's a "yes", we join in early 2004.

The worse case is that we'll join later next year with an 18-month transition.

We are starting to talk to partners about co-operation. I've been over to Bristol with a couple of our building societies that we do a lot of business with, talking about their preparation for the euro. They're asking questions about our preparation for the euro. It is becoming quite a topical discussion point at the moment, if not an activity.

Nick Miekle, senior manager, Accenture:The starting point we're seeing at the moment for a lot of companies is: "The euro issue is a bit like Y2K, so we'll give it to the technology guys and they can sort it out and everything will be rosy."

But I'm hard-pressed to actually find an area of an insurance company that is not going to be impacted in some way, shape or form, even if it's just a training programme.

We've typically seen about 60% of the effort of the euro programme is in the technology space, about 40% of it is all the bits that fit around that.

The fundamental difference between this and something like Y2K is that this is going to touch customers.

A successful Y2K programme was judged by the fact that no one knew you ever ran one. Frankly, the success of something like the euro is going to be driven by how smooth the transition is and how well the impact on products and customers is effected.

Where does the euro touch? Pretty much everywhere. I had a very interesting debate with one of the big insurance companies a few weeks ago about what its approach to adopting the euro was going to be.

Its starting point was: "We are going to do the minimum amount of work." Depending on who you ask within the organisation, you get a very different answer about what that minimum is.

So you speak to the technology guys and it's: "We'll strip out the pound signs and we'll make them currency-neutral and then we'll have to do a little bit of wrapping round the side during the interim, then we'll take it all away."

You talk to the marketing guys and brand begins to become an issue. You talk to customer service and call centre people and they begin to think about the transition period, where it's: "Hang on, am I going to have people asking me to explain what the euro equivalent is?"

Jenny Margetts, EMU project manager for UK commercial, Royal & SunAlliance:The euro is going to affect everything from our point of view - from our products and our processes through to things like our literature and business partners, customers and suppliers. So what we're trying to do at the moment is assess that impact and identify the type of work we will want to take forward when we get a decision to join. I think we'd agree with a time-line that that puts it at the latter part of this year.

I'm hoping we can get a common agreement in terms of how companies and brokers change over, because I think that's where costs can increase significantly.

Everyone will be affected during the transition period - for example those handling requests for a policy or payment of a premium or claim in euro. It affects them as they change over because they're going to have to become familiar with new work processes. What do you do if someone has sent their policy in sterling? How are you going to issue it? Are you going to change your policy wording to something that's got euro-compatible limits in, or are you going to continue to issue it in your old version?

Roger Brookhouse, president and chief investment officer, Chubb Insurance:Regarding financial impact, you've got to cast around to think of the good news, the balance seems to be favour the bad news.

We will get lower returns, therefore the underwriting has to be that much more efficient and profitable and less prone to dipping into reserves, because the returns on the reserve are going to be lower.

Where do you put the money? Do you put it in the UK, denominated in euro? Do you find somewhere else to go? On balance, you want to go to a more dynamic, more flexible kind of investment theatre.

My job is to get the maximum returns; we would put less money in the UK than we otherwise would have done. It poses an interesting problem for UK companies.

Steve Wright, AMP euro programme director:One of the beauties of having a foreign parent is that if you're sitting in a City boardroom, the emotion goes out of the situation. It becomes another corporate risk. Work out what you're going to do.

How deep do you have to do that business impact analysis now? At the moment we're talking about 12 weeks' work.

In three months' time we're probably going to be very much down the road of assessments being complete and maybe government making its mind up to go for a referendum, and then you're in a very much stronger position to carry on to the next level of piloting or planning or whatever you want to do.

Tim Jones, partner in insurance practice, Accenture:When people have completed this assessment, they'll look at the various lines of business that they're in and the various products that they're supporting, and for some it will be economic to convert.

But for some the decision may be not to convert, but to sell that book and withdraw from the market, or to team up with other organisations who share a processing platform and think about ways of sharing some of this cost.

We're working in a world where we're all so dependent on third parties that we must make sure the contracts and service agreements are all thought through well ahead of the time. If it's all done at the last minute, it is going to cost more and have higher risk.

Third parties and suppliers are the biggest worry, if only because they're the people who are outside one's direct control.

Mike Cranston, finance director, Fortis:What will happen to motor excesses? Are we going to multiply by 1.6? It is more likely that we will have an excess, say of €100 (£64) or ¤200 (£128) and that will affect pricing.

If we're going to do that, then we have to talk to the brokers, because what are the brokers going to say about that? Do they want to sell this product?

Then, in the middle of all that, we've got the software houses Are all the software houses going to do the same thing? They may do - but on the other hand they may not, so they're a key process.

Again, it's the bit in the middle that worries me. If we convert on 31 December, do I have a sterling set of accounts for last year and a euro set of accounts for this year? What goes in the middle?

Claire Duggan, IT service delivery manager, AXA:We are regarding it as an opportunity for us to spread the cost of streamlining our systems. Our priority is to reduce the number of systems and, as part of that strategy, we are looking at some of the processes involved here.

Martin Balch, treasurer, FM Global:We have the advantage that the principal underwriting offices in France and Germany are all using core systems and our staff are already pretty well-trained with servicing the requirements of, let's say, either a US-based multinational customer or one from the Euroland countries, if they're based there.

As we have those advantages, I don't see a great deal of difference technically, for us changing over our sterling business into euros.

Bill Marshall, premium accounting manager, CIS:The euro is probably the biggest compliance project we'll ever do. We haven't got an end date and we haven't got a timetable. So it's difficult, or it has been, for people to commit large amounts of resource when it might not actually happen. We're looking at things such as the areas we could rationalise and the systems we could drop - or not maintain in the longer term?

David Grant, marketing manager, NIG:I'm sure that it will create opportunities by making business easier. What we'd hope is that, within that environment, the UK insurance industry displays the strength for which it is known, as compared to many on the Continent.

I think it will be up to us to actually grasp this as an opportunity.

Jim O'Byrne, Euro Centre of Excellence lead partner, Accenture:I see the euro as an opportunity overall.

Three or four months ago the level of preparation was very much less than that which is now evident around the table.

Over the course of this year, what has been common for banks, insurance companies and building societies, is the board saying: "I want to move away from a watching brief, I want to appoint a programme manager. We're going to set aside some money and I want a report back by the end of Q2 or Q3 that says what our plan is."

The people who are lucky enough to have one platform and a simple set of products are laughing at the rest.

If you have lots of legacy systems you have lots of problems.

Nigel Peaple, euro compliance manager, Association of British Insurers (ABI):One of the messages that we're giving clearly to government is that there is a trade-off between the time that is available for the transition and the costs that fall upon companies.

The message is: the longer the period of certainty, the cheaper it should be.

We're also involved in a new treasury grouping called the Managed Transition Working Group, which is looking again at all those dependency issues.

What needs to be ready first? When will the banks be doing things? How will all this inter-relate with the retailers?

One of the things that has come up has been the need to establish some sort of draft guidance on dealing with these intermediaries and third parties.