Forced retrospective changes to policies would jeopardise contract certainty and undermine trusted relationships
The Federation of European Risk Management Associations (FERMA) has called for enhanced understanding of the insurance needs of European businesses to help them get through the pandemic and recover afterwards.
FERMA President Dirk Wegener said: “Many companies are under great pressure as a result of the pandemic. We need brokers and insurers to work with us as partners at this difficult time. For some businesses, it may be a question of survival.”
- FERMA believes that insurers should grant flexibility to business customers, as well individual consumers;
- FERMA is concerned that the imposition of retrospective changes to insurance coverage would create a breach of contract certainty and not help build a relationship of trust;
- FERMA supports the creation of national pools to cover future pandemic risks.
The Federation welcomed a strong statement from the European insurance regulatory agency EIOPA to insurers and intermediaries, which urges the industry to treat consumers fairly and exercise flexibility in how they are treated.
“The message is for businesses, too,” said Wegener. “It is essential that we have continuing access to insurance and that we are kept well informed. We also need insurers to exercise flexibility when reasonable and practical. This applies both to timing and extent of premium payments and claims negotiations. We welcome the support that insurers have put in place so far.”
Wegener acknowledged that insurers are also under stress. “EIOPA states that imposing retroactive coverage of claims that was not envisaged within contracts could create material solvency risks for insurers. We agree. Forced retrospective changes would jeopardise contract certainty and not help build a sustainable and trusted relationship. A healthy insurance industry will be, among other things, essential for business in recovering from the pandemic.
FERMA also urges the European Union to support the creation of national insurance pools for future pandemic risks. According to Wegener: “National pools have been useful in responding to other severe and widespread risks, such as terrorism. We believe they can be so now. We encourage the European Union to support such developments and ask EIOPA to make proposals. FERMA remains available to provide an expert view from risk and insurance managers.”