German insurers complain of ‘excessive’ regulation

German insurers are worried about what they describe as “excessive” regulation in areas such as sustainability reporting and data protection at both national and European levels. The chairman of the German insurance association’s presidential committee on corporate management and regulation, Christoph Jurecka, cited the coming EU Corporate Sustainability Reporting Directive (CSRD) as an example of excessive regulation at the European level. The CSRD entered into force this January and is designed to modernise and strengthen the reporting rules on social and environmental information. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability. The EC said that the new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment. The rules aim to help investors assess financial risks and opportunities arising from climate change and other sustainability issues. The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025. “We are very much in favour of standardised, high-quality sustainability reporting, because corresponding high-quality data is a cornerstone for sustainable transformation,” said Jurecka, CFO of Munich Re. “However, the density and abundance of reporting requirements are overwhelming companies. When reporting, the focus should only be on content that can be proven to lead to greater sustainability, especially with regard to climate change. Sustainability reports should not be data graveyards,” he added. His comments echo the thoughts of many of Europe’s risk and insurance managers who took part in this year’s Risk Frontiers Europe survey to be published at the Ferma Symposium in Antwerp next week. From the German insurance association's perspective, other regulations that affect the insurance sector, such as Solvency II or the directive on the restructuring and winding up of insurers, also suffer from double, or over, regulation. The general lack of allowances for small and medium-sized companies is a problem, according to the GDV. “It makes no sense that a small mutual insurance company with a handful of employees has to meet the same requirements as a DAX group,” said Jurecka. GDV managing director Jörg Asmussen also warned of hurdles in the way of digital transformation in Germany. “The General Data Protection Regulation (GDPR) stubbornly adheres to the principle of data minimisation, which is no longer appropriate in an emerging data economy. Especially in the area of self-learning artificial intelligence, it is counterproductive to severely restrict data processing,” said Asmussen. “Even when sharing business email addresses, high regulatory requirements are required. We urgently need to bring about an adaptation of the GDPR that is more oriented towards the real and current risks. Otherwise, it will slow us down,” he added. Asmussen criticised the fact that the GDPR restricts insurers from fully processing insurance applications digitally and without human intervention. The GDPR allows the automatic processing of data with the consent of the customer. However, data protection authorities require an additional option for review by clerks. “This makes customers wait and costs everyone involved unnecessary time. It should be sufficient for insured parties to be able to request a human review if they are dissatisfied with the digital result," said Asmussen. He added that the European legislators must make it clear that such automatic decisions are not prohibited under the GDPR. "Alternatively, the [German] Federal Data Protection Act should allow digital contract conclusions and [make clear that] service processing will be allowed,” said Asmussen. The GDV has also called for more consistency and frameworks in the fast-developing world of sustainability reporting and investment. “The consideration of sustainability criteria is an integral and established part of capital investment… 90% of investments are now invested according to sustainability criteria,” said Asmussen. Insurers have significantly increased the proportion of sustainable investments in the past year and would like to do even more. “But there is a lack of suitable projects and suitable framework conditions,” pointed out the GDV managing director. Asmussen admitted that the path to CO2 neutrality, which insurers operating in Germany have committed to by 2050 at the latest, is not straightforward. This is reflected in the so-called CO2 footprint, which the sector published for the first time in 2022. “After 71 tons of CO2 based on one million euros of investment in 2021, this value was 79 tons last year,” said Asmussen. He cited catch-up effects caused by the impact of Covid-19 as a probable cause and said that data availability and quality are only improving gradually. “We will continue on the path to CO2 neutrality consistently and transparently. In the coming years, we will publish concrete interim targets for our sector for 2030. To do this, however, we rely on meaningful data and credible decarbonisation paths for the real economy,” said Asmussen.

German insurers complain of ‘excessive’ regulation

Sustainability reporting and data protection are problems areas: GDV

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