It is a heavy potentially costly risk capital

A week ago, insurers English, all families combined, wrote to the Minister of economy, Christine Lagarde, to worry about the drift between the spirit of Solvency II directive European to govern from 2012 their capital requirements, and enforcement actions such as they are today considered ("Les Echos" from September 14). The Director General of la Mutualité française (FNMF), Daniel Lenoir, explains why these expensive shifts in funding, particularly marked for mutual health, may translate into increases in contributions, threatening their competitive position. The number two of the FNMF will change very soon combat: his appointment to the direction of future regional health Lille Agency could be announced by the Council of Ministers on 30 September. The rumour said that he would be replaced by Jean-Martin Cohen-Solal French mutuality, the current Deputy DG.

Why the French mutuality is concerned measures for the application of Solvency II

We came back two years back! What offers the European Committee of regulators of insurance (Ceiops) gum the acquis of the third and fourth quantitative impact studies (QIS) in recognition of the specificity of the health risk. First, the model works as if we go out to the first euro, forgetting that in France we are complementary to the mandatory regime. Then, there is not enough distinction between health and welfare, which led to largely overestimate the volatility of the risk carried by health mutuals.

How much it cost in additional own funds to mutual

We have calculated that the additional capital for mutual health would amount to 2.7 billion euros, or a quasi-doublement to the current requirements. In principle, the approach of Solvency II, calibrate the requirements of equity risk, is smart. We also played the game of Ceiops, in responding to its calls for consultation, including through the Amice, the European association of mutuals and cooperatives of the insurance. The problem is that the position of the Ceiops led both to an oversimplification of the segmentation, and prudential outbidding.

Are mutual societies particularly penalized

Unjustifiably the solvency requirements, increasing it in fact creates an additional challenge for partnerships, in particular mutual, taking no other way to adapt and strengthen their reserves and, therefore, for those who are not sufficient, to increase their tariffs. This additional margin requirement is approximately 17 of the contributions. This will create a real distortion of competition in our disfavor.

The solution isn't to be found in the famous internal models Could it be a stamped FNMF

We fought from the beginning, in the formula standard, health is apprehended in the closest possible to the reality of the risk. We support internal models, but mutual societies do not have the means of major groups, and many of them choose to the standard formula. In addition, I do never made many illusions about the ability of the internal model to reduce significantly the capital requirement: If the gap is too important with the standard formula, regulators will not follow. We have therefore chosen to develop tools to help companies adapt to the standard formula best.

Solvency II is likely to hinder the development of provident mutual and retirement

The implementation of the directive may actually hamper the ability of mutual insurance to cover their members on certain risks. In particular, the problem of dependence is not settled. It is a heavy, potentially costly risk capital. If the requirement is excessive, mutual will not have the capacity to raise needed capital. The question is also on the retirement savings, where mutuality, historically this public service, the independent and veterans, is between 15 and 20 of the sector. We had pleaded to the French level for a specific treatment of retirement, in order to avoid distortion of competition for pension funds, but we have not heard so far.

How can things evolve

The solution will not be political. Should the Commission, Parliament and the European Council take again the record and do understand the Ceiops that his way of work does not meet the spirit of reform. It must be that there is a force of reminder to avoid that a double drift technocratic and inflation will not result overdone capital requirements, on behalf of excessive application of the principle of prudence.