Regulation could drive UK risk managers overseas: AIRMIC

One firm in seven would consider moving their risk management function overseas if it were regulated in the UK, according to a survey of members of AIRMIC (the Association of Insurance and Risk Managers).

88 percent of AIRMIC respondents said regulation would affect their jobs either negatively or very negatively. Six percent said there was a ‘strong possibility’ that it would cause the risk management function to move to another country, with eight percent describing it as ‘a small possibility’. If those who did not express a view are removed from the sample, the totals rise to eight and eleven percent respectively. Just five percent agreed with the idea of regulation.

As well as the loss of jobs, any such move would have implications for Lloyd’s and the rest of the London insurance market, which draws much of its business from UK-based firms. AIRMIC members spend £3 billion p.a. on insurance.

The findings, revealed this week at AIRMIC’s annual conference in Manchester, follow months of uncertainty about whether UK risk managers will be included in EU plans to regulate insurance intermediaries from next January. The FSA has said that anyone who conducts insurance ‘by way of business’ will be affected, but they have yet to clarify what is meant by this term.

At issue is whether private sector risk managers, who purchase insurance on behalf of their employers, are to be treated in the same way as brokers and other intermediaries who are paid a fee or commission to buy cover on behalf of clients. Most risk managers work for multinational companies and other large enterprises; more than three quarters of FTSE 100 companies are represented in the membership.

“Everyone, including the FSA and Treasury, agrees that regulating risk managers would serve no public interest,” said AIRMIC chairman Nick Chown. “Our research indicates that in no other EU country will risk managers be regulated. I appeal to the FSA and the Treasury not to put the UK industry at a competitive disadvantage.”

AIRMIC and the London Brokers Committee wrote to the FSA nine weeks ago requesting clarification on the issue, and have yet to receive a reply.

Other findings of the survey include:

* 69 percent of risk managers expect their firms to make greater use of self-insurance than at present over the next five years;
* 60 percent say their firms have taken a greater interest in risk management over the past year;
* 59 percent believe the cost of Directors’ and Officers’ insurance has either stabilised or is falling;
* 90 percent rate their main insurance brokers’ performance as either good or very good;
* 91 percent rate their relationship with their lead insurers as either good or very good;
* 62 percent are either dissatisfied or very dissatisfied with the price of insurance;
* Business interruption has consolidated its position as the main concern among risk managers, followed by reputation management, contract risk management and employer’s liability.

•Date: 17th June 2004 •UK •Type: Article •Topic: Operational risk
Rate this article or make a comment - click here