Don’t give up the fight on global programmes!

There was plenty of interesting news coming out of the RIMS conference at the start of this month, as the world’s biggest corporate risk management society met for its annual gathering in Boston. One big issue on the agenda was global programme regulation.

This is not a new topic. Commercial Risk Europe and its sister title International Programme News have been covering this debate closely since launch back in 2010.

This was when the European risk and insurance management community really started to get serious about the frustrations faced when attempting to build seamless and compliant global programmes in an increasingly protectionist world.

Unfortunately, it seems that despite various efforts in Europe, the US and Asia-Pacific, little progress has been made.

The International Association of Insurance Supervisors (IAIS) just does not seem to think this topic merits its attention as it grapples with some pretty meaty issues on a more macro level.

Take a quick look at the programme for the association’s upcoming Global Seminar, to be held in Buenos Aires, Argentina on 13-14 June, for reasons why regulation of global programmes struggles to make the agenda.

The number one priority of the IAIS clearly remains avoiding another 2007/2008-style credit crisis.

The first two topics of discussion at the event are a holistic framework for systemic risk in the insurance sector, and ComFrame and the ICS – the set of international standards focused on effective group-wide supervision of international insurance groups.

Next up comes the role of insurance in promoting economic development and resilient communities, including sustainable infrastructure investment. Then, the regulators will focus on climate risk – challenges and opportunities. And finally, new technologies. So, this list of very important topics reminds us why the consistent treatment of international programmes may struggle to find its way onto the agenda.

But, as Mary Roth, CEO of RIMS and current chair of the International Federation of Risk and Insurance Management Associations (Ifrima), stressed in a recent interview with us, the global risk management community should not give up the ghost because of a lack of response from the IAIS so far.

The IAIS and its national supervisor members may well be focused on much bigger matters, but this topic matters too. Fundamentally, international programmes do not work as consistently and seamlessly as they should.

This is partly because national insurance supervisors in various increasingly important global markets are following a protectionist agenda, under pressure from politicians and local vested interests.

They, understandably from one perspective, want to ensure that those multinationals and their international insurance partners keen to tap fresh demand in their markets, do not ‘take the mickey’ by shifting all benefits out of the country.

Multinationals that are keen to maintain a decent international reputation and be seen to be doing the right thing need to take this seriously and act accordingly, just as they should not be setting up shell companies to dodge taxes. This is obvious.

Presumably, no serious multinational would opt not to invest in a country because difference in conditions and difference in limits are not recognised, or insurance premium tax is too complicated and onerous. To assume so would be rather ‘bigging up’ the role of insurance management.

But, it seems that clumsy application of the protectionist principle in far too many territories is adding to the seemingly ever-growing list of reasons why investing for growth in capital- and expertise-hungry markets is more difficult on a daily basis.

So, the big question is how to ensure that the complex and, at times, politically sensitive matter of consistent treatment of international programmes is taken seriously and moves onto that IAIS conference programme.

The idea suggested by Ms Roth during our discussion, of a serious academic study on the impact of the problem on international investment in emerging territories and regions of the world, makes immense sense.

As demonstrated by the programme for the Buenos Aires IAIS meeting, the international insurance supervisory community has a lot on its plate currently. And don’t forget, it is still reeling from the fallout from the implementation of Solvency II and related risk-based supervisory standards worldwide.

So, to really grab the attention of these beleaguered supervisors, the international risk and insurance management community needs to provide a simple, easy to understand and economically and academically robust case, delivered in unison via Ifrima. We will support the project wherever we can.