One small step-Comment

The ongoing research that we are carrying out for our Risk Frontiers annual survey of Europe’s risk managers and for our Global Programmes management report that will be both published at the FERMA conference, plus our new survey of Europe’s leading corporate insurance brokers—Risk Distribution—that will be published with the September issue of the paper have rapidly underlined the importance of this area for the whole market. As noted in previous comments and analyses on this matter it is clearly no easy nut to crack. National governments do not tend to draft financial regulations and fiscal rules with the goal of making life easier for international risk managers. In fact it is more likely that quite the opposite is the case as these rules tend to be hatched and revised to maximise revenue for hard-pressed governments that are in search of soft targets and at the same time help protect often fledgling domestic industries. hideThis seems to be basically what was happening in Brazil and it seems the international lobby, including FERMA, have helped to clear up what could have been a serious shot in the foot on the part of the Brazilian regulators on behalf of international business and investment in the fast-growing economy. The insurance supervisors themselves are often woefully understaffed and resourced and frankly have more important things to worry about such as the prevention of fraud, dodgy sales practices in consumer finance and solvency requirements. Local insurers and to a lesser degree brokers do not really have an interest in helping their international competitors to shift premiums swiftly and easily into Europe, the US or Bermuda so cannot be relied upon to help. The picture is further complicated by the fact that it is not necessarily in the interests of the big insurers to oversimplify all of this. This is because they compete ferociously for the big ticket, multinational accounts, and do not really want to do so primarily on price. Thus if the patchwork quilt nature of global programmes is maintained they, and to a lesser extent the brokers, can continue to compete on service and hope to charge for it. Competition authorities of course do not like anything that dampens competition and promotes standardisation, especially if it is based upon a collaborative effort by providers. But in this case surely they must rubber stamp what is essentially an effort to clarify statutory rules and ensure that nobody breaks them. This is not about competition but compliance and as such a cooperative effort by the market collectively and especially if driven by the customers—whom the competition authorities are supposed to be protecting—needs to be backed by the competition chaps and the insurance supervisors. CRE looks forward to reporting progress on this excellent effort and also publishing comments from the IAIS and some of the national supervisors themselves on how they will work to ensure that the confusion is cleared up once and for all to everyone’s long- term benefit.

One small step-Comment

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