Insurance industry shows unease over new risk management regulations
The European Union is currently working to introduce new regulations to the insurance industry in an effort to moderate risk and exposure. These rules are meant to impose new risk management standards on large insurance companies in order to mitigate any problems that could be caused by future financial disasters. In Germany, these regulations are being met with resistance as the insurance industry balks at the deadlines imposed by the European Union concerning the implementation of these new regulations.
German agency criticizes time frame of implementation for new regulations
Germany’s Federal Financial Supervisory Authority, often referred to as Bafin, has criticized the European Union‘s regulation deadline as being too restrictive. The agency suggests that the regulations affect insurance companies in different ways and forcing all companies to comply with regulations could be a problematic issue for the insurance industry as a whole. According to the agency, if the deadline remains inflexible, the country could simply pull its support of these regulations entirely. Such a drastic step could cause a major rift in the European insurance industry.
Industry groups come together to offer alternative
Bafin is not the only German organization that is expressing concern over the new regulations. Insurance industry groups have also come together to suggest that the time frame through which these regulations are to be enacted could create a troublesome environment within the industry. These groups are suggesting that European insurers be given a seven year period during which they could adopt the regulations slowly and mitigate any financial tension that could be caused by doing so.
New regulations place more financial pressure on insurers
The new regulations bring higher administrative costs as insurance companies attempt to adhere to the strict risk management standards that the EU is imposing on them. For large insurance companies, this is not likely to be a significant issue. Smaller insurers could feel severe financial pressure, however, as these organizations already have a limited amount of money to spend on administrative costs. If small insurers are forced to adhere to the same timeline as their larger counterparts, these insurers could be pushed out of business in certain parts of Europe.