IAIS support for more consistent global programmes welcome but unlikely–Belgium

Global programmes are clearly the most efficient and effective way to manage the kind of cross-border risk portfolios that most larger, and even now medium-sized, European and international companies carry in today’s global economy. But as business continues to become more global and interconnected national governments and their regulatory bodies refuse to let go. The result is a patchwork of rules and regulations that are designed to protect and promote local businesses but actually too often simply stifle growth and add unnecessary cost. Pressure has been building among the risk management community for the IAIS to seek solutions in the insurance sector at least. The European Captive Insurance and Reinsurance Owners’ Association called on the IAIS to at least push for acceptance of basic standards such as excess coverage back in December 2012. But the IAIS has not accepted the challenge to date.hideJohan Willaert, Vice President of Ferma and Risk Manager at Agfa-Gevaert, said that he would like to see an IAIS initiative in this increasingly important area. But he is doubtful that simplification will be that easy to achieve and actually believes that things will become more complex over time. “I think that a global programme, by definition, will always be a product that is a balance between efficiency, creativity and compliance. If you are a very centralised company it is better to work through a global programme as it gives you leverage. You have to push the global programme as far as possible so that it is as broad as possible and remains compliant,” he said. “There are a number of questions you have to ask such as: ‘Am I covered, will the programme pay when called upon and what are the rules I need to comply with?’ It is very difficult to say if this can somehow be made simpler. Unfortunately, in my view, I think it will only become more complicated,” continued Mr Willaert. Gaëtan Lefèvre, President of Belrim and Risk and Insurance Manager at engineering group CMI, advised fellow risk managers to go back to basics: “You have to ask what is the goal of the global programme. The answer is to protect the assets of the company. Compliance is not the basic goal. The goal is to protect the assets of the company. This is the point,” he said. Risk and insurance managers often bemoan the limited choice of insurers that are able to offer truly global solutions to their risk transfer needs. Chris Staes, Managing Director HDI-Gerling in Belgium, the sponsor of this year’s European Risk Frontiers project, pointed out that there are very good reasons for this limited market, not least cost. “A global network is very important and very expensive to maintain. You have to ask whether you want and need to build your own network of branches or use fronting partners. There are not so many truly global players anymore in the insurance market so we will have to see how it develops in the future. Compliance with national insurance rules and regional rules such as Solvency II is tough and could have quite an impact on a number of insurers, especially smaller ones. There are a number of brokers that can act on a global basis but there is also the question of money,” he explained.

IAIS support for more consistent global programmes welcome but unlikely–Belgium

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