After the broad consultation launched in April 2013 by the European Commission about the insurance of natural and man-made disasters, it is now the time for the European Parliament to give its position on the matter with a non-binding resolution.
The draft report was published by Finnish MEP Sempo Terho, rapporteur for the Parliamentary Committee on Economic and Monetary Affairs (ECON) responsible for this file, on 25 September 2013 (available here).
As FERMA advocated in its response to the consultation in July 2013 (see here), Mr Terho is insisting that a mandatory insurance scheme is not necessary and that “prevention is the most important factor in terms of protecting people and avoiding losses”. He states, “It is more efficient to minimise the consequences of disasters instead of providing cover and repairing afterwards.”
Consistent standards of safety and security are also a precondition before any mandatory financial scheme is designed. If a mandatory mechanism is set up to cover disasters across the EU, it will be premature because not all member states yet have the same understanding of good safety and security requirements.
For FERMA, increasing technical defenses (against flood, fire, or windstorm for instance), improving processes and training management to handle crises are the first steps to any sound disaster risk management.
Buying insurance to be able to finance the damages, business interruptions and third party liabilities is, of course, also crucial for businesses, and it is then important to consider how to improve market capacities and the tools that are already available in the insurance market.
At this stage FERMA does not see any reason for a mandatory framework to improve the insurance market capacities, and we will support Mr Terho’s draft report with the help of our Finnish member association FINNRIMA to ensure a constructive relationship at national level.