President meets the Commission
FERMA President Jorge Luzzi held his first meeting with Karel van Hulle, Head of the European Commission Insurance and Pensions Unit, in January to discuss insurance issues. FERMA is a recognised stakeholder and has one or two general meetings a year with the Commission.
Jorge indicated that the continuing delays to the progress of Solvency II through the European Commission and Parliament are affecting captives. FERMA says they will remain in regulatory limbo between the old systems and Solvency II until it is transposed into national law. The Commission is reviewing equivalence regulation with two of the largest captive domiciles, Bermuda and Guernsey, in addition to Japan and Switzerland.
FERMA is still pressing for inclusion of large risks in the Insurance Mediation Directive 2 (IMD2), although the discussion has reached European Parliamentary level. FERMA wants to have the transparency principle agreed with the intermediaries’ organisation BIPAR in 2010 incorporated into the directive and applied to industrial risks as well as consumers.
Jorge was also able to present FERMA’s views on developments on the restrictive reinsurance regulations in Brazil which went into effect about a year ago. The European insurance association Insurance Europe (former CEA) has also protested about the restrictions and the Commission is discussing the subject with the Brazilian authorities.
Things in common
A meeting between FERMA representatives, the European insurance association Insurance Europe and Lloyd’s found a number of interests in common. FERMA President Jorge Luzzi, General Secretary Pierre Sonigo and Executive Manager Florence Bindelle took part in the discussions.
They agreed that there should be a common position between FERMA and Insurance Europe on regulatory protectionism of insurance and reinsurance taking place in countries like Brazil, Argentina and India.
Co-insurance remains under scrutiny. The European Commission has hired consultants to follow up the results of the business insurance inquiry and see if market practices have changed, as the Commission wishes. FERMA supports Insurance Europe’s position that co-insurance is not a threat to competition and capacity, and the two agreed to co-operate on this issue and raise their views with the consultants. There may be a discussion on the subject at the FERMA Seminar in Versailles in October.
The views of the two organisations, however, diverged on the subject of the Insurance Mediation Directive 2 (IMD2). FERMA believes it should include large risks, but Insurance Europe argues that it is more related to mass consumer protection and not business customers. Insurance Europe understood that the transparency protocol agreed between FERMA and the European intermediaries’ organisation BIPAR would protect commercial insurance buyers, but FERMA argues that it is voluntary and unenforceable.
Flood, storm, earthquake and drought
The European Commission has published a consultative paper on natural catastrophe risks in Europe: Risk relevance and Insurance Coverage in the EU.
This report is the result of a conference, organised the Internal Market and Services Directorate in October, in which FERMA participated. The scope of the project is to assemble information on natural catastrophes across European member states and on current insurance practices.
The analysis is intended to provide food for discussion and ultimately give the basis for future European Commission initiatives to promote an efficient market for flood, storm, earthquake and drought insurance.
FERMA intends to provide comments on the new report. The deadline for responses is 31 May.