FERMA has called for a cautious approach to any changes to the regulatory treatment of differences between EU national insurance contract laws to avoid jeopardising the market for large risks which is working well.

FERMA has made these comments today to the European Commission in its response to the final report by the Expert Group which has been considering whether differences in contract law between EU countries are an obstacle to the cross-border provision of insurance.

Representing buyers of insurance for large risks in the majority of EU member states, FERMA said that this comprehensive report sheds light on the potential impact of national contract law differences over the use of insurance of products in the European Union. It welcomed the conclusion of the Expert Group that insurance products for large risks are already widely distributed on a cross-border basis.

FERMA has told the Commission: “Risk managers, as corporate insurance buyers, share the view that the provision of large risks insurance products on a cross-border basis is already occurring without any major obstacles arising from local insurance contract law provisions. In our view, the current legal situation is more than satisfactory for cross-border operating organisations when it comes to negotiating contractual terms for specific coverage and this gives EU companies a much needed legal certainty and competitive advantage.

FERMA President Julia Graham commented: “Industry needs tailor-made insurance products to support and secure its development. Insurance coverage must fit the diversity of operators, their multiple locations and their different exposure to risks. Differences in insurance contract laws that could be obstacles to such tailor-made insurance products are overcome thanks to the large degree of contractual freedom and free choice of law that currently exist.

Attempts to make national insurance contract laws converge would be, according to FERMA, a long and costly enterprise with unclear benefits and potential unintended consequences for the large risks insurance market.

The Commission will now follow up on the report with stakeholders (consumers, businesses and the insurance sector), which could lead to a formal consultation (Green Paper).
Once settled in, the newly elected European Parliament and its legal affairs committee (JURI) could also decide to produce an initiative report to express its position regarding the matter.

Notes for journalists:

The Final Report of the Commission Expert Group on European Insurance Contract Law can be consulted here:

Media contacts
Lee Coppack, FERMA media coordinator
+44 (0) 208 318 0330 and +44 (0) 7843 089904