Thursday, 9 February 2012
Captives and cat risk top list of AMRAE concerns
The fate of captives and the effects of the financial crisis ranked among the main worries of France's top risk managers as the 20th edition of Les Rencontres d'AMRAE kicked off in Deauville.
In a meeting with the press, the president of AMRAE, Gilbert Canameras summarised the issues that will provide the main discussion points at this year's event and will dominate industry discussion in France for 2012.
After a tough 2011, a new year brings new challenges and plenty of issues to tackle, AMRAE's President said.
"We've been through a difficult year, with the natural catastrophes and the Eurozone crisis," Mr Canameras said. The events of 2011 have changed the perception of many risks, he noted, and have had an effect on the insurance market too.
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The most pressing subject has less to do with natural events and restless markets but with negotiations currently taking place in Brussels.
During the press conference, Mr Canameras expressed particular concern about the possible effect of forthcoming solvency rules on insurance markets. “It is not the crisis that weakens insurance companies,” he said. “The concern is more related to the regulators and Solvency II.”
Mr Canameras noted that insurers could suffer with the new requirements because they will have to account their assets according to mark-to-market standards.
This could reduce the value of part of their portfolios, especially in their fixed income elements. “What should not happen is that, in the future, insurance companies find themselves in the same situation that banks are today,” he warned.
Solvency II is also expected to hit the captives owned by European companies. But Mr Canameras did point out that captives are set to retain their status as an important tool at the heart of risk transfer strategies.
“Owners may have to recapitalise their captives to comply with Solvency II,” he said. “It will be a matter of putting some more money on them,” continued Mr Canameras.
For his part, Yvon Colleu, AMRAE's treasurer, said that the main impact of Solvency II on captives is likely to be felt in the form of higher operational costs.
Another source of concern for insurance buyers is the recent downgrading of sovereign ratings of European countries, a development that has directly damaged the credit ratings of several insurers in Italy and Spain in particular.
Decisions by Standard & Poor's, Moody's and Fitch have generated much criticism in continental Europe, but France's top risk managers believe that the agencies have a role to play in the market.
“They are a tool among others for risk managers, who have the responsibility to chose solvent counterparties for their companies,” Mr Colleu said.
But the risk manager also stressed that, if the ratings of insurers continue to fall, they could no longer be viable as business partners. “It would be hard to justify the choice of an insurer whose rating is lower than the rating of our own companies,” he pointed out.
For his part, Mr Canameras stressed that some risks have gained in relevance for European companies as a result of the stress-packed year.
They include those related to natural catastrophes, supply chains, political instability, cybercrime and human resources. All of them figure prominently among the activities of the 20th Rencontres.
Mr Canameras was elected president of AMRAE last year, so this is his first Rencontres as the top man at the association. He expects that attendance will top 2,000 people that will have to brave the Siberian cold and snow covered streets of the posh Normandy resort.
On challenges to come for AMRAE, Mr Canameras stressed that the association is keen to strengthen its links with other national risk management associations, as well as with the Federation of European Risk Management Associations, FERMA, as its members expand their international activities.
On domestic turf, AMRAE is resuming negotiations with CSCA, the association of insurance brokers, to try and boost the transparency and legal security of insurance contracts.
The two associations have already signed agreements on this subject in recent years, but the goal is to make further progress by focussing on issues such as good practice, compliance, tenders and others.
Mr Colleu highlighted the fact that FFSA, France's insurance association, is also taking part in the discussions this time.
He said he hopes to achieve some progress in the next 12 months, even though plenty of discussions lie ahead. “Reaching an agreement between two parties is difficult, and it is even more difficult when there are three parties involved,” Mr Canameras said.
Some of the subjects will deserve a further look in the course of the year.
For example, Frédéric Lucas, the general secretary of AMRAE, who heads the association’s HR committee, announced the organisation of a meeting on risk management and human resources, to take place on June 25 and 26 in La Boule, a resort in the Atlantic coast.
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The view from Istanbul – Turkey
Aysan Sinanlioglu is responsible for risk management at Dogus Holding AS, the Istanbul-based holding company parent of Dogus Group. The Group is involved in financial services, automotive, construction, media, tourism, real estate, energy and entertainment businesses. Ms Sinanlioglu, an experienced risk manager who has been in her position with Dogus for less than a full insurance renewal cycle, shares her perceptions of the state of risk management in Turkey and beyond.
