Emphasis on modelling could shift underwriting decisions to a senior manager within insurer
‘We are very concerned about the impact Solvency II will have on the market especially for commercial and industrial insurance and the implications not just in Europe but across the world because other jurisdictions are looking to adopt similar solvency rules.’
These were the words of FERMA president Peter den Dekker, speaking at the opening of the FERMA Forum yesterday. He said that Solvency II had emerged already as a major concern for delegates at the conference. ‘It is going to be one of the big things throughout this conference - and after we leave it is still going to be an important issue,’ he commented.
The Comité Européen des Assurances (CEA) recently issued a letter to CEIOPS expressing their major concerns about the impact that Solvency II will have not only on the insurance industry generally but also on insurance buyers, ie policyholders.
Den Dekker said that this contrasted to the CEA’s approach last April when the European parliament adopted Solvency II. At that time the legislation was warmly welcomed by the CEA but received a cautious welcome from FERMA.
‘The solvency capital calculations will rely very strongly on models,’ he continued. ‘We wonder if the emphasis on modelling could shift underwriting decisions to a senior manager within the insurer like the CFO. In that case, buyers would lose the understanding of their business that they have built up with underwriters who have the experience to rate their risks correctly.’
Den Dekker expressed the hope that the internal risk management that insurers are required to have by Solvency II will not be too overwhelming and over-riding and that underwriters will be able to take into account their clients’ risk management approach.
‘We want an active discussion on this in which we invite the brokers’ association BIPAR to participate, not just advising their clients with captives behind the scenes but also publicly raising their voice to defend their clients’ interests,’ said den Dekker.
In his speech, he also pointed out that brokers’ commissions had yet again become a conference focus this year with news of a lifting of the ban on contingent commissions in the US. ‘I hope that in a year’s time broker remuneration will not be an issue any more. We are trying to work together with the broker associations to come up with a sensible agreement to get this issue pushed out of the way so that we can concentrate on issues that really matter to us like Solvency II,’ he explained.
This forum marks the 35th anniversary of FERMA. More than 1,100 people have registered which, said den Dekker, means FERMA is still an important platform for information and for networking.
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