During the last annual conference of the French association AMRAE in Lille last February, the President of AMRAE Brigitte Bouquot and FERMA President Jo Willaert shared their views on the need for a sense of urgency in managing risks which are today systemic and inter-connected.
FERMA: In terms of AMRAE’s relationship with Europe, what are your priorities?
Brigitte: Solvency II is certainly something which we have followed closely. We see that large insurers are very prudent. They are taking time to discuss risks, to do their scenarios. They are taking more time to make decisions. At the same time, I believe that the current process of consolidation in the insurance market is positive for risk managers. The risk carriers have become very powerful which is good for us because risks are becoming extreme. We are looking for insurers which can offer truly global programmes and are very powerful.
We are also aware that there are enormous implications for French enterprises in developments related to data privacy, the end of safe harbour provisions for data transfer and other cyber risks. I think the legal landscape for business in Europe has become more demanding for these issues, and there are others such as the use of drones, where companies are expected to anticipate more and not wait for the European Commission to act.
Jo: The consolidation in the insurance market reflects the development of industry generally, but the market is large and there aren’t monopolies. Among the large, global insurers, there are still sufficient for us to choose from, and the capacity is now enormous. I think this regrouping is also a good thing in terms of the quality of these large insurers and the expertise they can offer.
Brigitte: Insurance is a business of people. With mergers, there is an increase of capacity and expert capability, but there is a risk of losing expertise and knowledge if key people leave.
Jo: There is an advantage in the larger number and the wider skills of the people working in these companies. I think this consolidation reinforces the profession and deepens the knowledge available. They are already at a high level and will improve still further as mergers bring them together.
FERMA: Has Solvency II been a big issue in terms of captives for AMRAE members?
Brigitte: Yes and no. Everyone has done what they needed to do for Solvency II. It was primarily an administrative process. It did require work, and there were some difficult decisions to be made. It was most profound in terms of risk of underwriting, governance, and some corrections to elements of the accounts. But it was not an expensive exercise in terms of capitalisation.
Jo: It was no more difficult than it was for a commercial insurer, but it did make companies reflect before starting a new captive.
Brigitte: There is something interesting for industrial or commercial enterprises. You have a model of risk which is very operational. Then when you try to apply this approach to insuring the enterprise, it seems that sometimes the company’s idea of enterprise risk may not be the same as that of the insurers.