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  • Writer's pictureRichard Cutcher

FERMA wants more proportionality and consistency under Solvency II

Laurent Nihoul, FERMA board member, outlined the Federation's Solvency II objectives in GCP #36


The Federation of European Risk Management Associations (FERMA) is fully engaged in achieving greater proportionality for captives under Solvency II, as well as greater consistency applied across the European bloc.

Laurent Nihoul, Group Head of Insurance at ArcelorMittal and a FERMA board member leading on captive initiatives, expanded upon the Federation’s position in its ongoing dialogue with the European Insurance and Occupational Pensions Authority (EIOPA) when he was guest co-host of GCP #36.

In January 2020, EIOPA launched its first major review of the insurance directive since it was implemented in 2016 with FERMA represented through CEO Typhaine Beaupérin on the Authority’s Insurance and Reinsurance Stakeholder Group (IRSG).

Nihoul told Global Captive Podcast FERMA has two primary objectives – to strengthen the principle of proportionality to ensure the administrative burden is reduced for captives and small insurers, and to achieve a greater level of consistency between national regulatory bodies in their application of the proportionality principle.

“We hope to reduce the workload and complexity, for instance, around reporting and governance for less complex or smaller insurance companies, including of course captives,” Nihoul explained. “But our objective is also to promote and defend the interests of the whole industry because we believe smaller insurance companies create more competition in the market which is beneficial to the insurance buyers.”

The question of consistency is important for FERMA and captive owners, since there are reports of some jurisdictions applying a lighter or heavier touch than others when it comes to regulating captives under Solvency II.

“The principle of proportionality is not applied in a consistent way across all national authorities in the European countries and we have tried to promote in our dialogue a kind of methodology for having a more predictable and consistent process in the way national authorities assess the way they apply the proportionality principle,” Nihoul added.

“We believe we are making some progress and we hope some changes will be applied in the revised and improved version of Solvency II that should come in the following years.”

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