FERMA criticises EU’s PPD
FERMA has published its response to the European Commission’s public consultation on the revision of the EU Public Procurement Directives (PPD), calling for the exclusion of insurance policies from their scope. The Position Paper is available to read here.
In it, FERMA argues that the current EU public procurement framework is ill-suited to the needs of public sector organisations purchasing insurance. In its view, the Directives create market inefficiencies, inequalities and negative impacts for public buyers of insurance coverage.
Risk and insurance managers in the public sector are required to comply with the PPD when purchasing insurance policies. However, FERMA believes that the existing rules are overly cumbersome and inflexible, and fail to reflect the volatile and cyclical nature of the insurance market.
In its Position Paper, FERMA notes that the complex administrative burden associated with the PPD also discourages insurers from participating in public tenders. This reduces competition and can leave public sector entities facing limited insurance capacity, weaker coverage terms, and potentially higher premiums than those available to private sector organisations.
FERMA has therefore called on the European Commission to exclude insurance policies from the scope of the PPD. Such an exclusion would align with the existing exemptions for loans and other financial products, and would remain consistent with the overall objectives of the Directives.
Commenting on FERMA’s position, Laurent Nihoul, chief executive of FERMA, said: “Access to sufficient and affordable insurance coverage is vital to the resilience of public sector entities and is in the best interests of citizens, who ultimately bear the losses sustained by the public sector when risks are not transferred to the insurance market.”
“Rigid public procurement procedures are not well suited to insurance and discourage insurer participation, reducing capacity, weakening coverage and potentially increasing premiums for public sector entities.”
“Like other financial services already excluded from the PPD, insurance operates in fast-moving markets where prices and conditions change rapidly. Excluding insurance from the scope of the Directives would therefore be a logical and consistent step, helping to ensure public-sector access to sufficient and affordable insurance in the interest of resilience and citizens alike.”
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