Mutuals and co-ops say directive could decimate sector
Mutual insurers have warned that current plans for implementing the Solvency II directive threaten the future survival of many within their sector.
Asmo Kalpala, president of the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), said that the capital requirements proposed by Cieops (the Committee of European Insurance and Occupational Pensions Supervisors) in its plan for implementing the directive are too onerous and will have a disproportionate impact on his members.
The corporate structure of mutuals and co-operatives means that it is more difficult for them to raise capital than listed joint stock insurers, according to AMICE, which is concerned that the need for capital could force many mutuals and co-operatives to consolidate, demutualise or even close. Such an outcome would narrow diversity within the insurance market place, it said.
Kalpala said: “Although the new Solvency II regulatory regime is not intended to restructure the European insurance market, it currently risks doing just that.
“If the principle of proportionality introduced by Solvency II does not work in practice, we are likely to see aggressive market consolidation.”
Kalpala, who is also president and chief executive of large Finnish insurer Tapiola Group, said: “Disproportionate governance and reporting requirements pose real challenges for smaller insurers. Similarly, inflated capital requirements will hit mutual and co-operative insurers especially hard.”
He said that AMICE had initially welcomed Solvency II, but the European Commission needed to maintain diversity and competition within the insurance sector.
