Günter Schlicht: I would just like to say one thing about Mr Fromme’s remark – you lit the fire and now you must live with the consequences. Briefly to firelighting, we did in fact light a fire in the sense that at the beginning of the decade we spoke out against restrictions of competition in the German industrial insurance market, and we made ourselves very clear. We still believe that this was the right thing to do. It did have a follow-up in legal cartel matters, which is not yet over. However, I think that when such things happen it is our job to light fires. We also have no basic problem whatsoever that the EU Commission carries out this investigation. On the contrary, we welcome that, and we also believe that it brings together a lot of sensible things. What we are talking about today was not directly mentioned in the report, but in discussions. And here we are of the opinion that it is moving in the wrong direction. One other comment: From time to time we get the impression that insurers have also lit a few fires on the question of co-insurance. The comment was made here and there that if the cartel office’s findings were upheld, then we must consider whether we can continue to do co-insurance at all. We see no material background for this whatever. There have never been any disputes about co-insurance, nobody has ever claimed that this was relevant for cartel law.
Wolfgang Faden: That would also influence the knowhow. The knowhow of an insurer increases with the company regularly dealing with the risk. If a company can no longer negotiate with Deutsche Bahn, with Deutsche Bank, Lufthansa, Arcelor Mittal and others, then over the medium and long term the knowhow will decrease dramatically. In my opinion, this also leads automatically to a restriction of competition.
Günter Schlicht: We do not really want to light a fire, to come back to this metaphor, since representing this theme vehemently to the Commission can actually mean that you give a push to regulation, and that is not our intention.
Ralf Oelssner: Now there are in this sector analysis a few other results. What has proved to be no longer so relevant in the medium term, as almost to be expected, is the subject of the length of contract periods. In Austria, Slovenia and Italy, there are contracts with periods reaching up to 10 years. These arose mainly because the market wanted to secure the retirement pensions of brokers, that was the actual background. But that is no longer regarded as a hot subject. Then we now have horizontal co-operation. We said in Brussels that we were clear about the idea of the Group Exemption Regulation, and this also has a time limit. However, from practice we cannot draw any conclusions that indicate any misuse. Insurers say that if the Group Exemption is terminated, when it no longer exists, then there will be for insurers an area which is not exactly without legal rules, but in which we are not certain any more what we can do, and then we prefer not to do it.
Günter Dröse: It is interesting that another EU regulation lays down that as banks we need insurance contracts which run for at least two years. According to Basel II, a bank must at all times have insurance cover with one year cover ahead. At each point in the year I have to have insurance cover for one year ahead, that means that on 30 December I not only need cover up to 31 December but to 30 December of the following year. That is, incidentally, inconsistent with the capital requirement, which you only have for one year. But that means that we cannot work with annual contracts at all, we need two-year contracts.
Ralf Oelssner: Over and above that, Mr Dröse, it should be left to an industrial insurance client whether he takes out a contract with his leading insurer for two or three years. I regard highly the principle of Vollkaufmann, which means that as full-grown businessmen we are responsible for our actions, and the old principle caveat emptor, the client should watch out for himself, that is very pronounced with Vollkaufmann.
Hans-Jürgen Allerdissen: I believe that one aspect of the market, or one segment, has dropped completely out of sight, namely the so-called project cover. When I set up an infrastructure project, then I have to keep the cover going for the total period of construction and I cannot change direction in the middle. That is technically impossible and completely absurd as far as the risk is concerned. Here I must be allowed to bind an insurer for a longer period. Anyone who ignores this, does not know the world.
Herbert Fromme: One of the things in Germany that has annoyed me for years is that everyone swears about Brussels, but no-one is properly organised to have his voice heard. The EU Commission has a clear agenda for the insurance sector,
Mr McCreevy is very strict there. The German insurance industry fights most of all with the federal government about life insurance. But at the European level, neither insurers nor insureds have any agenda for Brussels. That produces an imbalance. The German industry should think a bit here, the European industry has to pull itself together and set up strong lobbies. This has so far been centred on Berlin, but the music is played in Brussels. Nobody looks in that direction, or when they do, they do it too late. But then there is a lot of aggravation.
Ralf Oelssner: I believe that in general you are quite correct in what you say. The question is, though, how does one change things? The Bundesverband der Deutschen Industrie is represented in Brussels with both staff and an office. The insurance buyers association Deutscher Versicherungsschutzverband is naturally not, it is represented via FERMA, or at least it tries to be. FERMA as an association is much too weak to have any effect in Brussels. Now and again you can see in associations a parallel to German politics. While Britain and France are well-known for sending their top people to Brussels, German politicians regard Brussels as a rubbish dump for people who are no longer good enough for Berlin and for whom Berlin has no more use.
Hans-Jürgen Allerdissen: How the insurance industry, but also we as big clients, present ourselves in Brussels – and here I agree basically with Mr Fromme and Mr Oelssner – here we have to improve our position. But I have no easy answer.However, I will give an example of where the interests of industry in regard to Solvency II are identical with those of insurers. That is the question: where does over-regulation start? Because Solvency II – and this has not been sufficiently clear in public discussions so far – also applies to captives. That means that the Solvency requirements do apply 100% to our captives. I ask myself where this makes sense, and why haven’t we made this clearer before? Here a company insures itself and is in a completely different situation from an insurer who covers the general public. Nevertheless, we have not managed to get that across to Brussels.
Ralf Oelssner: We have certainly articulated this to the German supervisory authority BaFin.
Hans-Jürgen Allerdissen: Yes, but not so that it had any effect.
Ralf Oelssner: We have managed to create a relatively high level of understanding at BaFin, but it cannot make a stance against the other supervisory authorities in Europe. The British Financial Services Authority marches ahead with a very rigid position. When you meet the people, they are nicest people on earth, but when you read the regulations they issue a cold shudder runs down your spine. The majority of regulatory offices in the EU follow the lines of the FSA. Therefore what is ahead of us will also apply to captives. I have for years been strengthening the equity capital of our captives, simply to be sufficiently prepared for when Solvency II eventually comes.
Herbert Fromme: May I ask whether that is the only or the most important criticism of Solvency II which you have? In your view, are there good things also in it? The idea is to provide the same chances for insurers, level playing field, and risk prevention. The insurer must be solvent when something explodes. Is that what you want, or was the current system also adequate?
Hans-Jürgen Allerdissen: I have been following with considerable interest the discussions about the ratings that will then still be necessary. I ask myself, what else have the rating agencies done in the past than just to check this? One of the two would then have to become redundant, and disappear. Of course it is for the insured important that in the case of a claim, particularly with long-tail risks, the insurers stand firm, there is no question about that. As far as it goes, Solvency II is certainly also acceptable, if it is sensibly done. However, as Mr Oelssner has said publicly, if it means that it produces an almost identical premium situation, that would be negative.
Ralf Oelssner: At least I asked the question of whether that could be.
Hans-Jürgen Allerdissen: If it were so, then of course it would be a step in quite the wrong direction.