FERMA, the representative organisation of the risk management profession in Europe, has shared its support for revisions to the EU Public Procurement Directives (PPD), advocating for changes that would improve the ability of public-sector companies to purchase insurance coverage.
This stance was articulated in their recently released Position Paper on the Revision of the EU Public Procurement Directives, a direct response to the European Commission’s public consultation.
The European Commission’s consultation proposed a series of policy options designed to introduce greater flexibility into the tender processes for public-sector entities when purchasing insurance.
FERMA’s position aligns with this objective. The organisation stated: “In an increasingly volatile risk environment, the need for robust and comprehensive insurance solutions to bolster the resilience of public-sector entities is critical.
“However, FERMA believes that current PPD requirements relating to public tenders for insurance are too burdensome both on companies and insurers and lack the flexibility to secure coverage in an efficient and cost-effective manner.”
It is FERMA’s view that the PPD creates market inefficiencies, including lengthy procurement processes (up to three months) that deter insurers from public tenders, especially during peak renewal periods.
Extensive administrative requirements, such as the European Single Procurement Document, add further burdens.
Additionally, the PPD’s lack of flexibility fails to accommodate complex, multi-insurer insurance programs, FERMA further noted.
“As a result, public-sector companies are often at a disadvantage when negotiating insurance cover exposing them to higher premiums compared to private companies, and the risk of not finding sufficient coverage,” the organisation stated.
FERMA proposes that the European Commission consider the following policy options to address inefficiencies and inflexibility within the PPD:
Adapting the PPD to introduce lighter requirements for insurance contracts. Although FERMA has found a number of areas where regulations could be improved, it does not believe that these improvements would resolve the problems with purchasing insurance.
Excluding insurance policies from the scope of the PPD. This would align with the existing exclusions of loans and other financial products and would be compatible with the overall objectives of the PPD.
Allowing ex post reporting on the purchase of insurance policies. This would provide a greater degree of transparency while giving public-sector companies the flexibility they require. However, this option would nonetheless represent an additional administrative burden compared to an exclusion.
Commenting on the proposed revisions, Typhaine Beaupérin, CEO, FERMA, said: “FERMA recognises the need for a robust and effective EU procurement processes. However, as it currently exists, the PPD acts as a significant drag on the ability of public-sector companies to secure comprehensive coverage at a price in line with private companies.
“Further, the requirements disincentivise insurers from participating in public tenders which is detrimental to the resilience and competitiveness of the EU. We therefore urge the European Commission to consider reducing the administrative burden it applies, excluding insurance policies from the scope of the directives, or allowing ex post reporting to enable greater purchasing flexibility.”
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