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In February, Michaela Koller took up the post of director general of the Brussels, Belgium-based Comité Européen des Assurances, which represents European insurers and reinsurers. She was previously a member of the management committee of Brussels-based European Savings Banks Group. She is a German national and a qualified lawyer, and was involved in the creation of the European Banking Industry Committee. Ms. Koller spoke to Business Insurance Europe about her priorities in her new role.
Q. What are the main goals for the CEA this year?
A. The CEA is dealing with a number of priority issues. Our goal is to ensure that the industry's voice is clearly heard as European institutions start their consideration of the Solvency II proposal, the project to overhaul prudential supervision of insurers, as well as supervisory practices in the European Union. Another key area is retail financial services.
In this context, CEA will focus on the reviews of the [European Union] Insurance Mediation Directive (2002/92/EC), the Directive on Distance Marketing of Financial Services Directive (2002/65/EC) and the "general good" rules. In addition, CEA will promote the renewal of the insurance Block Exemption Regulation [to certain E.U. competition rules] beyond 2010 and its extension to claims settlement agreements.
Q. What role can the CEA play to help shape Solvency II?
A. The CEA will continue to play its key role in coordinating the insurance and reinsurance industry's position on all aspects of Solvency II. Our unique selling point is the fact that we are the only organization to represent all types of insurance and reinsurance undertakings. Solvency II needs to deliver full recognition of diversification and specialization benefits to meet the basics of a risk-based economic approach. The supervisory system must be enhanced to better cope with the way insurance is managed today and reach the objective of harmonization set out by the European Commission. Also, we will continue to be actively involved in the debate on the standard approach, which we need to get right to allow small and medium-sized players to equally benefit from Solvency II.
Q. What are the CEA's principal responses to the European Commission's interim report on competition in the business insurance sector?
A. We welcomed the substantial effort that has been made by the European Commission to analyze business insurance at the European level. CEA has made a number of recommendations for the final report, which will be published in September. In particular, we have highlighted the benefits of Block Exemption Regulation in promoting competition by removing barriers to entry and enabling policyholders to benchmark insurance products. A number of aspects of the methodology used in the report also need to be addressed in order to avoid overstating the profitability of the sector. The indicators and methodology used are questionable. For example, when looking at profitability, a suitable period of timea minimum of 10 yearsshould be used to take into account the cyclical pattern of insurance and recurring trends.
By restricting its analysis to the period 2000 to 2005 and focusing more precisely on the year 2005, the interim report does not take into account the specific nature of the insurance sector and gives a misleading picture of the industry.
Q. How does the CEA interact with bodies that represent insurers elsewhere in the world?
A. The CEA maintains a dialog with other regional bodies through meetings and discussions such as with the Basel, Switzerland-based International Association of Insurance Supervisors and the Insurance and Private Pensions Committee of the Paris-based Organization for Economic Cooperation and Development, where CEA has an observer status. It also has discussions with the different American insurance associations, like the Reinsurance Association of America, the Insurance Association of America and the American Council of Life Insurers. Clearly with Solvency II on the horizon, other bodies will be keen to understand how it will work and what the implications will be for their members. At the international level, CEA has a good dialog with the IAIS and the International Accounting Standards Board on subjects such as Solvency II and Phase II accounting standards. Once a year, around the annual conference of the IAIS, the major insurance associations of the world gather together to discuss the most important issues and political trends in the United States, China, European Union, Japan and the Middle East.
Q. What are the main challenges for nonlife insurers in Europe?
A. The increase in scale and frequency of extreme weather events is having a big impact on insurers. Climate change is gathering political momentum at a European level. The focus of the debate is moving from the long-term solutions of mitigation strategies, such as the Kyoto Protocol or the E.U. Emissions Trading Schemes, to measures that prepare us for more frequent and extreme weather events, such as private insurers and public authorities working together and sharing information in order to build up more sophisticated mapping and zoning for flood exposure. Clearly there is an expectation for insurers to be part of the solution. Climate change will require a coordinated response across a range of policy areas, including health, and it also raises questions of insurability.