1asig.ro
 About us  Contact  Site Map   Login   


Search
HomeInsurance marketEventsPublicationsXPRIMM TV  
 News 
 FSA 
 Insurers 
 Insurance Brokers 
 Interview of the week 










Interview of the week

Archive

Michaela KOLLER, General Director, CEA - European Insurance and Reinsurance Federation


The main challenge for the CEA is to ensure that the regulatory environment for European (re)insurers is not unduly affected by either short-term or long-term regulatory changes stemming from the economic crisis. The CEA is working to ensure that any changes take into account the specific characteristics of insurance and are appropriate for the industry. The CEA is monitoring and engaging in the debates on initiatives at EU and international level to change the existing supervisory architecture and on other legislative responses to the crisis in the supervisory and the consumer protection areas.

PRIMM: How does CEA intend to address the economic crisis and prevent its future impact for the insurance market? What are the main challenges the crisis continues to provide for the European insurance and reinsurance markets and what development trends will facing these challenges drive further on?
Michaela KOLLER:
The main challenge for the CEA is to ensure that the regulatory environment for European (re)insurers is not unduly affected by either short-term or long-term regulatory changes stemming from the economic crisis. The CEA is working to ensure that any changes take into account the specific characteristics of insurance and are appropriate for the industry.
The CEA is monitoring and engaging in the debates on initiatives at EU and international level to change the existing supervisory architecture and on other legislative responses to the crisis in the supervisory and the consumer protection areas.
The CEA is working to promote a positive image of the insurance industry by demonstrating the general resilience of (re)insurers during the crisis and by showing that insurance is not a driver of systemic risk.
Also, CEA expects consumer protection issues to feature strongly in the work plan of the new European Commission, partly as a result of the crisis. For example, the Commission is expected to publish a White Paper later this year or early next on possible legislation and options for insurance guarantee schemes in the EU.

PRIMM: What are the key differences between the business models of the banking and insurance industries and why the merger of banking and insurance authorities is not advisable?
M. K.:
The principal aim of insurers when investing in assets is to cover their commitments to policyholders. Their assets’ allocation is driven by the objective of matching the expected liability cash flows in terms of amount, timing and risk. Insurers therefore generally invest in products with well defined cash flows and risk profiles and largely limit the risk profile of their investments so that it is in line with their commitments to policyholders. The fact that insurers do not use leverage to enhance their investment returns means that they are less exposed to fluctuations in financial markets.
In contrast to other financial services provides, such as banks, insurers are also characterised by the inversion of their cost/revenue cycles. This means that insurers are primarily funded by policyholders’ premiums, making them less exposed to liquidity risk and to any problems accessing credit markets. Indeed, the insurance industry could be said to have had a stabilising effect on financial markets as a result of its anti-cyclical behaviour.
It is these differences in business models that necessitate separate supervision for banks and insurers. The CEA believes that improved coordination and cooperation arrangements between authorities are the best way to achieve cross-sectoral consistency.

PRIMM: What does CEA think about the group supervision and the fact that its introduction has been left out of the approved Solvency II Framework Directive?
M. K.:
The CEA has always made clear its support for group supervision, arguing for effective cooperation and trust between supervisors and a supervisory regime based on the economic reality of groups.
The CEA believes that carving out group support from the text of the Framework Directive means that Europe has missed the opportunity to introduce a tool that would have met the need for the efficient and effective supervision of multinational groups.

PRIMM: Which is the main purpose of the reforms to the EU’s supervisory framework for financial services that were proposed by the De Larosière Group and carried forward by the European Commission?
M. K.:
The mandate of the De Larosière Group was to make recommendations on strengthening European supervisory arrangements in order to establish a more efficient, integrated and sustainable European system of supervision and to reinforce cooperation between European supervisors and their international counterparts.
The CEA welcomed the recommendations of the De Larosière Group and the EC’s subsequent Communication on supervisory architecture. It strongly supports the transformation of the three Level 3 committees that represent the EU’s insurance, banking and securities supervisors into European authorities with the ability to make certain binding decisions and with a mediation role. The CEA has, however, called for greater representation of the insurance sector on the new European Systemic Risk Council, even though the insurance sector is not a driver of systemic risk.

PRIMM: Which of the relevant experiences accumulated in the Western markets do you think would be transferable/suitable for an emerging market, as the Romanian one?
M. K.:
Diversification is one of the fundamentals of the insurance business model because it helps spread risk, which allows for the shifting of risk for reasonable pricing. Motor insurance is still the most important business line in Romania, but insurance companies in Romania are increasingly diversifying their portfolio to other lines of business. This process will make the Romanian insurance market stronger and more resilient.

PRIMM: Which would be the most efficient ways to enhance the public financial education, including its attitude towards insurance?
M. K.:
Financial education has a vital role to play in ensuring that European citizens are equipped with the knowledge they need when making important decisions for themselves and their families. Financial education raises awareness and allows consumers to make appropriate choices when considering, for example, how to ensure an adequate level of insurance cover, how to organise credit or how best to make provisions for retirement.
Improving financial literacy in Europe is a societal challenge which requires the contribution of a range of different stakeholders. Public authorities, the private sector, academia and others can all play their part when addressing knowledge deficits amongst consumers regarding the wide range of financial products and services on offer. The European insurance industry actively promotes financial literacy via a range of excellent initiatives throughout Europe.

| Published on 26.10.2009






















Copyright 2022 (c) 1asig.ro
powered by Media XPRIMM