Initiative on global programmes with IAIS draws guarded reaction

Virtually all European risk and insurance managers who have taken part in Commercial Risk Europe’s ongoing annual Risk Frontiers survey, to be published in full in November, agree that some kind of concerted action is needed to deliver greater certainty on compliance in particular. Apart from ECIROA’s initiative with the IAIS, it is thought that FERMA is working on a solution with the industrial insurance market that may be discussed at this week’s Presidents’ Summit in London. The insurers and brokers that CRE has asked about the need for action say that they would support some kind of joined up effort to help reassure insurance managers that their international coverages deliver what was originally intended and are compliant with local regulations and tax laws.hideCRE is currently preparing an in-depth independent report on Global Programmes that will be distributed with the November issue of the newspaper. As the analysis of this report’s early findings shows it is clear that there is an ever-increasing level of concern among experts about the inability of many national insurance regimes to deal with the rise of the global economy and needs of international insurance buyers. But it seems there is a great deal of uncertainty about whether this critical matter should be tackled via the regulatory route. Rather, many market experts believe that a more commercial solution may yet be the answer whereby buyers work with their brokers and insurers to iron out any problems. Philippe Rocard, CEO of AXA Corporate Solutions, told CRE in an interview [published in full on pages 20 and 21 of this issue] that AXA would support such an effort ‘even if it may not be very relevant to progress this with the regulators.’ “This is a difficult and complex area because the rules are so different and not stable in local markets. We would be cautious about an attempt to find an agreement between the international companies and the governments,” said Mr Rocard. CRE carried out a survey of DVS members in cooperation with the German insurance buyers’ association just before its annual symposium early last month and found that German industrial insurance buyers would generally welcome an international effort to secure greater consistency on global programmes. LACK OF SUPPORT But the response was far from unanimous. A quarter of those who responded stated that they would not support such an initiative and another quarter said maybe. A good number of those who positively supported the idea said that they were not sure how it could be made to work in practice. Of the 20 leading DVS members who took part in the survey, nine said that they would definitely support an industry-wide effort to tackle the inconsistencies attached to global programmes, five said that they would not and six said that they were not sure. Most of those who supported the idea voiced outright support. One risk manager said: “Free world trade must be supported and accompanied by a company’s insurance concept. Local restrictions are a fall-back into the middle ages.” But others gave a more guarded response. “I would support, but do not see how such an initiative could and would work!” stated one. “In principle we are a compliant company and we will do everything to ensure that our international programmes and international coverage are in line with local rules and regulations; whether country specific legislation can be without uncertainty for insurance coverage is beyond my expertise. But yes, I would support an initiative if it will improve certainty where uncertainty exists,” said another DVS member. Other DVS members do not see the point in any international effort but are still worried about the matter. “From my point of view I do not see the necessity of such an initiative as our programmes remained quite stable throughout the past 10 years. I’m just worried about the certainty with regard to compliance issues of international programmes,” said one insurance buyer. DISSENTING VOICES And then there were those that simply do not support the idea at all. “Industry initiative? Who will make the first step? I am a little pessimistic if such an initiative will lead to a result for our company,” said one respondent. Another response typified the diverse attitude of risk and insurance managers on most issues when he responded to the question about whether he would support an industry initiative with the words: “Probably not. We feel comfortable with the existing global programmes, insurers and tools.” It must be noted, however, that most of those DVS members who were not enthusiastic about the global programme initiative do not own captives. During a roundtable discussion held by CRE as part of the Risk Frontiers project with leading DVS and ECIROA members at the end of the conference participants agreed that it is likely that those German risk managers who do not have captives would understandably be less interested. Harry Daugird, Chairman of the Insurance Committee of BDI [Association of German Industry] and board member of DVS, was one of those who does not see a big issue. “Based on my experience in this area I do not think there is such a problem.” Hans-Jürgen Allerdissen, board member of DVS and Managing Director at Deutsche Verkehrs-Assekuranz-Vermittlungs, the insurance operation of Deutsche Bahn, said, “It depends upon the line of business. D&O can be a problematical area for example.” If we have to explain to the insurer the legal rules in country X or D&O rules have changed and cover subsequently is not arranged in the right way, this causes a problem to me. But in some other lines I see less problems.’ During the DVS Symposium Günter Dröse, President of ECIROA and Head of Insurance at Deutsche Bank, told CRE that the association had joined the IAIS to further its plan and explained what he would like to achieve with the IAIS. Mr Dröse said that the ECIROA members had registered 100% support for the effort. “Not one member questioned the initiative,” he said. EARLY STAGE Mr Dröse stressed that it is still very early days for the initiative and it would be a long-term project that would need the support of local supervisors. For this reason it would be essential to show local supervisors how improvements to the way global programmes work could help develop local insurance markets, he added. -- This topic will be debated in depth at the Malta International Risk and Insurance Congress in Valetta on November 25 and 26 that is organised by CRE. For more details click here.

Initiative on global programmes with IAIS draws guarded reaction

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