Tentative step towards global programmes solution taken at London meeting

Brokers and insurers met senior executives of Ferma and Airmic to discuss the practical implications and potential benefits of the creation of a market-wide database that would help risk managers ensure that their international programmes are compliant and work as intended. The parties have agreed to meet again to discuss next steps shortly after the summer break. It is hoped that something more concrete may be revealed during the Ferma Forum in Stockholm from October 5–8. The project will, however, only proceed if it has sufficient support from the whole community, as any effort that is only supported by a portion of the market would not succeed. The idea for an industry-wide effort on global programmes was first formally suggested at a lively seminar on global programmes hosted by Commercial Risk Europe and held in London in late spring.hideDuring this meeting Peter den Dekker, President of Ferma, John Hurrell, Chief Executive of Airmic and Helen Hayden, Risk and Insurance Manager at Prudential and Head of Airmic’s effort on global programmes, called upon insurers and brokers to step up their efforts on global programmes and compliance in particular. Global programmes have become more important for many European risk managers in recent times. This is because such a high proportion of European companies have sought to boost flagging domestic demand and cut production costs by expanding overseas, often to so-called emerging markets in Asia and South America. The capacity offered by insurance markets in emerging nations is often limited and so coverage has to be placed in international markets. Risk managers of companies based in Europe also seek to obtain more consistency of coverage, greater control and cost efficiencies through the centralisation of coverage though a global programme. But local regulators often seek to ensure that as much coverage as possible is placed locally even if the local market is unable to deliver the capacity required. This means that risk managers with international companies often attempt to balance their cost considerations and desire for consistent global coverage with the often confusing demands of local regulators and this can lead to compliance concerns. International insurers and brokers have worked hard in recent times to try and deliver the clarity, consistency and certainty that risk managers want and need through tools such as difference in terms and conditions that attempt to marry the local insurance requirements with international programmes. But risk managers all over Europe have become increasingly frustrated with the apparent inability of the insurers and brokers to deliver what they need—cost effective global coverage that is 100% compliant. At the CRE Risk Frontiers seminar in London the risk managers at least agreed that it was time for the industry to get together and work out how to fix this rising concern. It was suggested that the first step forward would be to at least obtain industry agreement about the basic information needed from local regulators and industry participants to help risk managers work out how and whether they could be compliant. Participants at the seminar said that a good start point would be the creation of a database of the basic rules that all risk managers could access and, in time, could be populated by information provided directly by the national supervisors. It has been suggested that the International Association of Insurance Supervisors (IAIS) could use its influence with national supervisors and possibly also tax authorities to persuade them to join the effort. No response to this suggestion has been received yet from the IAIS, however, which is currently focused upon the effort to harmonise European and international solvency rules in a move sparked by Solvency II, Europe’s planned new capital adequacy regime.

Tentative step towards global programmes solution taken at London meeting

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