FERMA urges EU to boost re/insurance options
The Federation of European Risk Management Associations (FERMA) has called upon the Spanish Presidency of the Council of the European Union to make progress on the green and digital transitions a priority to help bolster EU competitiveness and enhance strategic autonomy, while also ensuring the ongoing effectiveness and affordability of the private re/insurance market.
In a new paper “Contribution to the Spanish Presidency of the Council of the EU – ‘Europe, closer’: what does this mean for Risk Managers?”, FERMA calls for definitive action on several legislative fronts, including the Directive on corporate sustainability due diligence (CS3D) and Solvency II, as well as addressing the need for adequate insurance coverage to facilitate the transition to a low-carbon economy and for greater collaboration on cyber resilience.
The Spanish Presidency, which runs from 1 July to 31 December 2023, takes place during an important period for EU policymaking as 2024 will see the EU elections take place.
Considering the risk manager in the context of the programme of the Spanish Presidency, the FERMA paper addresses three key areas: Advancing the green transition, ensuring the EU’s open strategic autonomy – with a digital focus and thirdly the key role of insurance management in supporting the transition.
FERMA supports the ambitions of CS3D and the need for companies to address environmental and human rights impacts in their supply chains, but the paper underlines the importance of cementing a risk-based approach at the heart of the rules, which would enable companies to prioritise activities on these fronts. It believes this is important to ensuring Europe continues to play a lead role in facilitating the move to a low-carbon economy while remaining competitive.
The paper states: “To support the green transition, and to meaningfully combat the effects of climate change, FERMA advocates a more risk-based approach to value-chain due diligence aligned with international standards.”
The document also highlights the need for “affordable and adequate insurance coverage” to support organisations in their transition efforts and spotlights the importance of closing the growing protection gaps on this front. “FERMA is concerned that the private (re)insurance market is not offering sufficiently innovative, affordable or competitive risk transfer solutions,” it states.
On Solvency II, FERMA pushes again for the adoption of a more proportionate framework, which it adds “would ultimately give captive (re)insurance undertakings the status of low-risk profile undertakings, which would help give enterprises in the EU more options for their risk-transfer strategies.”
Addressing the digital transition in the context of Europe’s move towards greater strategic autonomy, FERMA commends the Spanish Presidency’s focus on reducing cyber risks and attaining higher levels of cyber security.
As discussions around the proposed Cyber Resilience Act continue, FERMA calls upon the Presidency to achieve political consensus on the legislation, stating: “For risk managers, the ethos of ‘cyber security by design’ in legislation is a positive and necessary development.” However, it adds, “We are mindful of the possible ramifications such a piece of legislation might have on the insurance coverage options for enterprises” and highlights the challenge of ensuring product availability that meets the risk needs of buyers.
FERMA also flagged the findings of its recent joint report on ‘Cyber Insurance Dialogue: How Europe can lead the way to cyber resilience’ and urges the Presidency to consider an annual cyber resilience summit involving all key stakeholders.
“FERMA looks forward to engaging with the Spanish Presidency during this critical period,” said Dirk Wegener, President of FERMA. “The risk management community has a central role to play in advancing developments on all of these critical fronts and contributing to the continued competitiveness of the European market.”