GC: What is your role at AIG, and how did you come to be here?
Diego Manzetti (DM): I joined AIG in 2011. I was previously working for Norton Rose Fulbright. The time I joined, AIG in Italy did not have a legal department. I created it from scratch, which, being a regulated entity, was quite special. I take care of all legal matters with the exception of claims. Since then, three more lawyers joined the team, so here in Italy we are a team of 4 lawyers. We cover the whole market. In 2016, I took the role of head of legal for South Europe and the Middle East and North Africa – which includes Western Europe, not just South. This also includes all the countries that are under the control of our Dubai office – from Russia to Middle East and North Africa. We have a team of lawyers in these countries just managing the team. So basically, I am taking care of the Italian operation on a day-to-day basis and then the other countries from a manager perspective.
I try to go to every country once per year, at least. We have a weekly call with each general counsel in each country, plus we have group calls once a week. So we are in close contact. Also, we have weekly reporting. Currently, my boss is the EMEA general counsel, based in London. And so, we also have interactions with our colleagues in London as the leadership team for legal in Europe.
GC: Building the team from scratch must have been an interesting experience.
DM: Of course. Building from scratch is about changing the mentality of management. Not being used to having a legal consultant in house that could help in achieving their business goals in a legal way meant it was a matter of building trust, and then building procedures as well. This was existing already in other AIG entities, but in Italy they needed to be created. This was also about trying to take the control of the legal spend, because not having a legal function in Italy meant that we were reaching out to external lawyers independently, which meant spending more and spending worse.
Another challenge at first was creating the relationship with the regulator in Italy. Until then, they did not have a point of contact at AIG. So we set about building a process of managing and receiving complaints – that is a sensitive area, especially for insurers, because it also allows the company to ensure that we are treating customers fairly. Now everything is more developed, we have regulations that provide for minimal requirements, but when I joined it was still to be built.
So, it was a lot of building what was missing, while at the same time doing the regular job and then trying to build a team on top of that. Things like understanding what the more critical areas were and trying to have the right talent in the team in order to mitigate the relevant risk rather than always referring externally. For example, one of the most sensitive areas we had here was the public tenders. We participated in a lot of tenders every year and that’s why we hired an administrative lawyer coming from private practice.
So, it was an opportunity to take this broader role in 2016, in which the challenge was to build the relationship with people that I knew. We are peers, and so creating the right level of exchange of information, dialogue, and knowing the different jurisdictions – some of which are quite different.
GC: What have been the big items on your plate recently?
DM: One is the Insurance Distribution Directive coming into force in 2018. That is going to be a change for the insurance market, also in terms of purely in producing documentation, because there’s going to be new European pre-contractual document requirements for those in the insurance sector, aimed at creating more harmonisation between the countries. They wanted to have pre-contractual documents which are shorter and more transparent for the customer. Instead of delivering 20 pages, it now should be up to three pages, with visuals to help the customer understand the different sections. So, it’s something that should be making life easier. There might be differences in terms of transparency of commissions to be paid to intermediaries, which again give big space to the individual countries on how to implement changes in relation to those businesses selling insurance not being insurance intermediaries. All those cases where the sale of insurance is not the main activity – like travel agencies. In that case they can sell travel policies if in connection with the travel they are selling. There will be requirements for them – training requirements for instance – which they did not have until now. Or introducing new training requirements for employees of insurance companies facing the customer or possibility to pay contingent commissions. It’s really covering the whole mediation business sector. But influencing the insurance company as well also because we sell mainly for intermediaries so those are our main partners.
It’s quite a big project, it’s very interesting. But it was originally meant to be implemented by the end of February but there was an extension – we are expected to implement it by the end of 2018. I think the big problem was countries not being ready with their implementing laws.
GC: How would you describe the regulatory landscape in Italy and what is your relationship like with the regulator?
DM: Quite active, and the relationship is one of trust. There have been a large number of regulations since the current regulator became in charge of regulating the insurance market in 2006. They are very customer focused, or at least have been since they restructured two years ago. Since then they are more into customer feedback – complaints and so on. So, they are closer to us – they’re really looking into details, and when I said the relationship is one of trust, it means that it’s important for me to have a dialogue with our regulator. Also, because you can be constructive, you can make sure that the areas where we need to improve our processes can be improved. It also means you don’t need to get a fine in order to understand – you can anticipate and you can work to make sure that your systems and everything else are in line. It makes life easier in the long run, I think it’s positive and brings value.
GC: Have you done much work in anticipation of Brexit?
DM: That is being managed centrally in London. In terms of AIG, speaking with colleagues in London who are the ones who are managing the project on a day-to-day basis, I would say that the insurance business is quite complex. You can’t shut down one day and open in another country the day after. You need to create a legal entity authorised to operate in the insurance business, then if you operate in freedom of establishment of service you need to have your passport to provide services in other jurisdictions. You have capital requirements, minimal requirements in terms of the functions that need to be in place. So, it’s a process which takes months and months, which means that in my view – not speaking for AIG – a transitional period leaves a lot of question marks. How long can you really wait before you start your process and before you move ahead? I think banks and insurance companies don’t have as much time to act.
GC: What do you see coming on the horizon that will impact your work?
DM: Blockchain is one. How and if that is regulated will be something to watch. I still need to make up my mind on this, but from what I can see, it seems that you need to think of the final outcome. Is the final outcome already regulated? Maybe blockchain is just a way of getting to that final outcome. It gives you more security, it makes sure the data is protected, but at the end of the day it could just be part of the sale of an insurance product and is already regulated. It also might impact on data protection. The fact that blockchain is set up in different ledgers where data is stored may require some discussion. There might also be implications in terms of competition and antitrust law – but I think the rules are already there, probably.
We can see how new technology is regulated by looking at the internet of things. In Italy we have regulated the black boxes in cars, for instance, because there is a requirement to offer the possibility to the customers to install black boxes in return for a reduction of a motor liability premium. That’s a tool that has some concern around data protection – confidentiality, and so on. But that’s an application where the law required the tool to be offered and they gave some framework about how to implement it.
GC: Are there any longer-term changes you see coming to the insurance sector?
DM: One change I see coming to the insurance business – not in my day-to-day business, but far down the line – is non-traditional insurance players entering the market. Companies like these tech giants, for instance. They have a very strong relationship with their customers where everything is built on a high level of service. So, the customers really rely and trust the business. So, they have a huge business in terms of numbers, so why not? Some of these already offer extended warranties in the UK, so they are already getting there. You wouldn’t buy insurance from someone you don’t trust, but if the trust is already there, why wouldn’t you buy insurance from these tech giants?
GC: Lastly, how would you describe your team’s mission for the next 24 months?
DM: To support our business colleagues. There are going to be so many changes for us. It’s going to be, in some ways, changing the way that they act in the market, the way they relate to their partners, or speak with clients, the way we manage data. Between now and 2019, we are going to be almost running a different business. It’s not just changing documents and updating them, changing the entity names – it’s about staying close to the business to ensure that we have a consistent approach in the market. I think that’s the most important area.
Also supporting growth. I’m very interested in new initiatives – this blockchain initiative, for instance – because it might be the future. It might. I want to make sure that we can adjust to these changes.