IAIS calls for patience on global regs as risk associations urged to step in

Manuela Zweimueller, head of supervisory practices at the IAIS

Manuela Zweimueller, head of supervisory practices at the International Association of Insurance Supervisors (IAIS), has told multinational insurance buyers not to expect the supervisory body to magically fix problems with global programme regulations anytime soon, but said it is starting to raise awareness of various issues with regulators. This prompted other experts at our latest conference to urge insurance buying associations around the world to step in and help clarify interpretations of current rules that are causing headaches for members.

Speaking at Commercial Risk’s ‘Global Programmes Asia 2020 – Gaining Maximum Benefit’ two day virtual event, Ms Zweimueller said the IAIS understands the problems caused by insurance regulations in certain jurisdictions for multinational companies. But she told delegates that the supervisor cannot tell countries and their regulators what to do, and therefore there are no easy solutions.

She said the IAIS can raise awareness, provide a platform for discussion and deliver feedback for stakeholders. “We can raise awareness of issues that may not be on the table of each regulator… so the first step is raising awareness that there is a problem,” she said at the event supported by Parima and sponsored by AIG, AXA XL, AXA Climate, AXCO and TMF Group.

But Ms Zweimueller conceded this is a journey that will take some time and change won’t happen overnight. “We need your patience,” she told the audience of insurance buyers, brokers, insurers and reinsurers.

Fellow speaker Praveen Sharma, managing director of Marsh’s insurance regulatory and tax consulting practice, said regulators have an opportunity to step up to the plate and help insureds buy cost-effective and compliant insurance globally, particularly through DIC/DIL coverages.

“I believe the regulators need to come to the table and take this as an opportunity to provide that flexibility and the choice that multinationals are seeking. This is in the best interests of all stakeholders. We are not being insular here. We are trying to protect the economy, we are trying to protect jobs, we are trying to protect people’s livelihoods. Companies need to insure against these risks economically and also to be compliant,” he said.

But Mr Sharma doesn’t believe regulators are going to come to the rescue, because he and others have been knocking on the door for many years without much progress.

Life is made more difficult for cross-border insurance buyers because insurers interpret current rules differently, causing further confusion. Insurers have long argued that these interpretations are a matter of competitive advantage, so they haven’t come to a common understanding to provide clarity.

With all this in mind, Mr Sharma urged insurance buying representatives around the world to take their members’ destiny into their own hands and work together to deliver a joint and single interpretation of insurance regulations.

“Through the various associations of Ifrima, Ferma, Parima and national associations, insurance buyers should work to come to a harmonious position on one understanding and interpretation of the rules. They should say, ‘this is how we are going to interpret the law’. Then it is up to the regulators disagree with the whole industry and its interpretation of the law,” said Mr Sharma.

He also thinks the insurance industry should work with its customers to deliver this.

“The insurance industry has the opportunity, has always had the opportunity, and the technical people, to come together and say, ‘this is how we are going to interpret the law in the various countries that are somewhat woolly and grey’, to provide consistency so its customer base, the knowledgeable risk management community, is aware of how [insurers] are going to deal with things. This will enable insurers to come up with the right product at the right price and ensure it is as compliant as possible,” said Mr Sharma.

Steve Tunstall, general secretary of Parima, said his association is keen to collaborate with various stakeholders, including other risk management associations and insurance bodies, to get some common interpretation of the rules. But he stressed that this has proven a tough nut to crack in Europe and the US for many years.

The CEO of Inzsure.com added that at the end of the day, insurance buyers at large multinationals simply want regulators to help ensure that they have as many options as possible, including cross-border coverages.

He added that regulators across the Asia-Pacific region are increasingly open to discussions with Parima about how they could make life easier for insurance buyers, but some are not interested.

“I think there is an issue that many of the regulators across Asia think generically of insurance customers being on the life side and they don’t want people taking too much risk. But the challenge with that is you have an uneven landscape – it’s complicated, it’s expensive and basically most boards just decide not to buy so much insurance and decide to do something else instead. We have seen that trend right across the planet and this is where the industry somehow has to a grip. I am a huge believer in insurance… but it is already difficult to talk to the CEO at the best of times; and when you don’t have affordable solutions, that is an increasing challenge,” he said.

Delegates were also told that AMRAE is pushing ahead with plans to convince its government to facilitate the creation of captives in France and put in place other measures to boost risk management, in order to help the country bounce back from Covid-19 and ensure insurance buyers can better deal with the hard commercial insurance market.