Restrictions to co(re)insurance could be damaging to businessesDocument Transcript
Press release3 June 2013Restrictions to co(re)insurance could be damaging tobusinessesThe Federation of European Risk Management Associations(FERMA)warned the European Commission that anyrestriction to the operation of the subscription insurancemarket could work to the disadvantage of business byreducing market capacity or making access to that capacitymore difficult.FERMA has expressed these concerns in position paper publishedtoday (3 June) commenting on the findings of a 2013 study byErnst & Young on co(re)insurance practices. The Commission hadasked E&Y to undertake the study ahead of the next review ofthe Insurance Block Exemption Regulation. In its current form,the Block Exemption will expire on 31 March 2017.FERMA states that the exemption to the application of EUcompetition rules of co(re) provides more benefits for themarket than issues. There is competition in the process, itargues, in the selection of the leader.“The subscription market plays a critical role in coveringindustrial risks. Therefore FERMA is concerned that anyrestriction to the operation of the subscription market wouldreduce market capacity (or make access to market capacity moredifficult) to the disadvantage of insurance buyers. These concernsare also shared by the insurance market itself.“Co(re)insurance practices are part of the basic functioning of theinsurance market in Europe (both the London and theContinental European markets). They are the only way to find thehuge financial capacities needed in the business insurance sector
and no individual market players could meet these needs on theirown. As it has been working properly so far and proved itsbenefits, it should not be hindered. Rather, it should bepermitted and allowed to continue.”FERMA makes the following comments:The first phase of subscription process (i.e. theselection of the lead insurer) is a highly competitiveprocess.Once the lead insurer has been selected, this practiceis time-efficient.When it comes to handling claims and resolvingdisputes, this practice brings legal certainty for theparties.Because of this recognised efficiency, thesubscription market attracts a great diversity ofinsurance companies, which is in the corporateclient’s best interest.Coinsurance business in Europe is competitive andattractive because of the recognised EU expertise.These capabilities should be preserved to maintainEU competitiveness with other coinsurance markets.For more information, contactLee CoppackFERMA media firstname.lastname@example.org or +44 (0)20 8318 0330 or+44 (0)7843 089904 (on 3 June)OrAfter 3 JuneFlorence BindelleFERMA executive email@example.com or +32 (2) 761 94 31About FERMA
The Federation of European Risk ManagementAssociations (FERMA) brings together 22 national riskmanagement associations in 20 European countries.FERMA has 4,500 individual members representing a widerange of business sectors from major industrial andcommercial companies to financial institutions and localgovernment bodies. These members play a crucial role fortheir organisations with respect to the management andtreatment of complex risks and insurance issues.Member associations are from the following countries:Belgium (BELRIM), Czech Republic (ASPAR CZ), Denmark(DARIM), Finland (FinnRiMa), France (AMRAE), Germany(DVS/BfV), Italy (ANRA), Luxembourg (PRiM), Malta(MARM), Netherlands (NARIM), Norway (NORIMA),Poland (POLRISK), Portugal (APOGERIS), Russia (RusRisk),Slovenia (Sl.RISK), Spain (AGERS and IGREA), Sweden(SWERMA), Switzerland (SIRM), Turkey (ERMA) and UnitedKingdom (Airmic).