Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Solvency II could shrink number of insurers: FERMA president

Reprints
Solvency II could shrink number of insurers: FERMA president

BRUSSELS—European risk managers are concerned Solvency II would impose capital requirements so stringent that the number of nonlife insurers and captive insurers available to write coverage for commercial risks would shrink, the president of the Federation of European Risk Management Assns. said Friday.

“The main goal of Solvency II is to protect policyholders' interests,” FERMA President Peter den Dekker said in a statement. “And we represent the largest policyholders in Europe. We have serious concerns that excessive levels of capital requirements as they are currently stated by (the Committee of European Insurance and Occupational Pension Supervisors) will affect the availability of insurance cover for medium and large European businesses,” he said.

Mr. den Dekker's remarks came after the Comité Européen des Assurances on Thursday published a report claiming Europe's insurance market and policyholders would suffer if Solvency II is enacted with measures proposed by CEIOPS. The report said higher capital costs under Solvency II would cause nonlife rates for some lines of business to go up as much as 20% and constrict product availability.

Some insurers, particularly small and medium-sized companies, might be forced to consolidate or leave the business under the Solvency II proposal, the report stated.

While rate increases worry risk managers, “our main concern is the potential reduction in the number of insurers capable of covering our risks,” Mr. den Dekker said. “This could force us to retain more risks on our balance sheet, impacting our ability to invest and remain competitive in a global economy.”

If insurer choice is reduced, large policyholders would turn to alternative funding mechanisms, FERMA pointed out. While that generally would mean greater use of captives, the association said it believes that under the CEIOPS proposal, most captives would be excluded from simplification measures that could make capital requirements less onerous.

Some captives might decide not to continue operating under Solvency II as it is currently proposed, FERMA said, further reducing the number of risk-financing options available to European policyholders.

Mr. den Dekker said FERMA is discussing with the E.C. how captives should be treated under the framework. “We trust that the European Commission will be able to balance Solvency II requirements in a way that the real economy will not be affected and our members will still be able to be competitive,” Mr. den Dekker said.

The CEA report is available online at www.cea.eu.