Tuesday, 4 October 2011
Risk managers seek clarification on Solvency II, captives and IMD
The insurance industry is still not convinced about the new wave of regulatory changes to be implemented by the European Union, a top insurance lawyer said during the Ferma Forum in Stockholm yesterday. During a session on regulatory issues, Brussels-based Guy Soussan, a partner at law office Steptoe & Johnson, raised doubts on measures that deal with issues such as insurance intermediation and solvency requirements.
Mr Soussan also highlighted the uncertainties faced by captive owners caused by the looming Solvency II Directive, a recurrent theme during the Forum.
The lawyer expressed concerns about the independence of the bodies that will be responsible for guaranteeing that the new rules will be properly applied by all member states of the EU. “The market needs to be sure that EIOPA will fully emancipate itself from the selfish interests of each member state,” Mr Soussan said, referring to the recently created European Insurance and Occupational Pensions Authority.
Solvency II continues to generate doubts, he said, especially among smaller insurance companies and captive owners, many of which would like to see prompt guidance about the measures they will have to meet under the new requirements.
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He also said that the lack of clear rules for captives is not helping to convince non-European domiciles to look for equivalent status with Solvency II rules.
“No wonder therefore that jurisdictions have already turned down offers to become equivalent,” Mr Soussan remarked.
Markus Mende, Managing Director Aon Global Risk Consulting, took part in a separate session on Solvency II and captives on Monday and later told CRE that captive owners particularly need clarification on the treatment of key financial matters such as the amount of relief that will be credited for internal loans to the parent company and reinsurance bought from companies based outside of the EU.
During yesterday’s session on regulations Mr Soussan also highlighted uncertainties about the new Insurance
Mediation Directive, IMD, which is currently being drafted by European legislators.
According to him, the new directive is not expected to extend the principle of automatic disclosure of remuneration upon request to large risks, on the basis that the corporate risks and reinsurance markets are sophisticated enough to deal with it themselves and so do not need the support of such legislation. That could not be the view of insurance buyers though. “The risk management community needs to make sure that the new IMD is not a missed opportunity,” he said.
Mr Soussan concluded: “The industry has understood that it will be shaken up by a new wave of European regulation. But it still needs to be convinced that those regulations will achieve the appropriate objectives.”
Yesterday’s session was chaired by Pierre Sonigo , Secretary Gen-eral of Ferma and also included Marguerite Soeteman-Reijnen, Group Man-aging Director, Aon GRIP Solutions and Denis Simonneau, Diplomatic Adviser at GDF Suez.
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