No to a one-size-fits-all approach! Yes to proportionality:

appropriate regulation throughout the three pillars!

AMICE held its third Solvency II seminar for small and medium-sized mutual and cooperative insurers.

Brussels, 16 September 2011

“The dialogue is open between mutual insurers and regulators and there is a good climate of discussion. Such discussion is still necessary because there are questions open and many small and medium-sized insurers feel that some of their concerns are not properly addressed.”

This was one of the conclusions of AMICE Vice President Marcel Kahn at the end of a seminar for small and medium-sized mutual and cooperative insurers held in Barcelona on 14 September by the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE). The seminar focused on proportionality in Solvency II, the new prudential framework for insurance.

Sixty representatives of mutual insurers from twelve EU Member States and supervisors from Denmark, Germany, Portugal and Spain met to exchange their views on the application of the important principle of proportionality throughout all areas (or pillars) of Solvency II: capital requirements, governance, and reporting and disclosure.

By far the majority of mutual and cooperative insurers are small or medium-sized undertakings employing thousands of people all over Europe. Taking as a basis Recital 19 of the Solvency II Framework Directive which states that the regime „should not be too burdensome for small and medium-sized insurance undertakings‟, they reminded supervisors that the mutual model has been around for several centuries, surviving wars and many financial and economic crises. Inappropriate and unproportionate application of the new rules could endanger the model and eventually deprive consumers from the choice of buying their insurance contracts with an undertaking whose business model is based on the mutualist concept of client ownership, sustainability and democratic governance.

Wrapping up, Marcel Kahn, who is also the CEO of the French mutual group MACSF, said: “I retain from today‟s discussions that both the supervisors and mutual sector have good intentions. Overall, mutuals are well capitalised and hence shouldn‟t be in dire need of fresh capital. But much work is still needed to work on pillars 2 and 3 (governance and reporting) in order to avoid that smaller players are driven from the market by the excessive cost of adapting to and complying with the new requirements. True proportionality, both in the rules and in their application by supervisors, must be achieved.”

Acknowledging that in many ways Solvency II can be seen as development in the right direction, Kahn is however concerned that

“we should really now get to the end of the legislative process. The industry needs stable rules because we have to prepare for the fundamental overhaul of our structures and systems.”

Finally, he urged the mutual and cooperative insurance sector to stay mobilised by working with their European association but also with their national ones.

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Notes to the editors:

AMICE is the Association of Mutual Insurers and Insurance Cooperatives. Its prime purpose is to ensure that the voice of the mutual and cooperative insurance sector in Europe is heard and that the interests of its members are taken into account in securing a level playing field for all insurers in Europe regardless of their legal form. This sector accounts for one third of the insurance companies in Europe and close to 25% of premiums. With more than 100 direct members and 1,600 indirect members, AMICE speaks for a significant part of the insurance sector.

By far the majority of mutual and cooperative insurers in Europe are small and medium-sized undertakings. AMICE therefore lobbies particularly for the interests of such SME insurers and organises specialised seminars aimed at the exchange of experience and the discussion of practical solutions.

Marcel Kahn has been Vice-President of AMICE since June 2011. He is the CEO of MACSF, a French mutual insurer insuring doctors and health professionals.