French mutuals descend on Berlin to promote pan-European mutual concept
Strangely, the group did not seek discussions with the Berlin-based German insurance federation, located less than two miles away, nor with the club of German mutuals led by Gothaer’s Werner Görg.
Instead, they were keen to let the German public participate in their thoughts, and organised a press conference. To ask the German media to a press briefing on exciting topics such as Solvency II or the future of EU mutuals last thing on a Friday afternoon at 5pm demonstrates healthy self-confidence. So, as a result, five French insurers met two German journalists.
There is a golden rule for jazz bands that states that they should not play if the audience is smaller than the band (with the exception of recording studios). But the German media were lucky—the French talked, and had interesting things to say.
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The discussion with the German mutuals did not occur for good reasons. The climate between French and German insurance mutuals can best be described as frosty. “Maybe the Germans are afraid of the competition,” said Jean-Francois Allard of architects’ insurer MAF—and he has a point there.
Insurance mutuals in France have a much longer tradition than in Germany, and there are three such associations. ROAM has represented regional societies and specialised insurers since 1855. One of its members MAF covers architects against professional liability claims while the specialist insurer MACSF protects doctors from potential medical malpractice claims. The smallest of the 45 insurers writes premium income of €629m, the largest €13.7bn.
The companies are doing well economically, but they have political problems, especially with Solvency II.
The French operate a website called “StopSolvency”, but they indicated that they would be content with long transition periods. “Of course we are worried,” said president Olivier Désert. “Our main problem is that the rules have still not been finalised.”
After all, small mutuals cannot simply raise capital. ROAM is demanding transition periods from three to six years, during which supervisors would monitor Solvency II fulfillment, but would act only according to Solvency I in the meantime.
The French mutuals are also not happy with the planned strict demands for the qualifications required of members of management and administrative boards, the fit and proper rules. “When doctors and chemists are elected by their peers to the administrative board of their insurer, then they are fit and proper”, said ROAM’s secretary general Marie-Hélène Kennedy.
Most German mutuals would agree with their French colleagues about Solvency II. But strong differences of opinion come to the fore on a different key question.
ROAM is pushing for the introduction of a new legal form, a European insurance mutual along the lines of the European SE or Societas Europaea. “We would then be in a position to organise cross-border profession-based mutuals,“ said Marcel Kahn of MACSF.
His architect colleague Mr Allard operates an affiliate in Germany in the form of a joint stock company. “We would prefer a form in which all policyholders can be members,” he said. Then there would really be equality between the mutuals and the corporations.
However, German mutuals reject the idea of a European mutual. They do not want to have to forego the tried and tested framework of German law. Brussels is taking a fresh look at the matter, after a long period of silence.
For example, the architects’ insurer MAF has, together with its Spanish counterpart, set up Euromaf, which is active in Germany and other EU countries. “We would like to have our customers there as members,” said MAF boss Mr Allard. This could, indeed, give these mutuals an advantage over German rivals in segments such as professional liability.
Another reason for the disagreement over the European mutual could be the way the associations are run.
The French insist on elections for the members’ representatives. Most German mutuals co-opt members to their governing bodies. The existing members pick their new colleagues.
But the French insurers argued that these differences do not necessarily rule out a European mutual. Both forms—election and co-optation—could probably coexist, they argue. A wise statement, made in Berlin, the city that for decades was the very essence of coexistence between hostile political camps.