European Risk Management Lobby Readies to Diffuse ''Spitzer Bomb''

While big broker houses are likely to sign on, smaller brokers would rather keep buyers in the dark. The broker renumeration bomb is still ticking for European risk management.

By Matthew Brodsky

Leaders of the Federation of European Risk Management Associations are expected to push insurance brokers for greater transparency when dealing with buyers, according to FERMA executives.

But while FERMA brass can, with a little bit of luck, count on the big brokers to go along, getting the consent of smaller European brokerage operations looks next to impossible, at least for the time being.

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Even Thierry van Santen, president of FERMA, admitted that pushing small and midsize brokers to sign onto pan-European guidelines is proving to be an exercise in futility.

"At the end of the day, this didn't work because the brokerage federation admitted that their members did not want to sign any paper that would talk about transparency," he said.

Small European brokers, which already have to deal with dozens of national regulations governing the sale of insurance, say yet more transparency rules are too expensive and onerous.

So, where does that leave FERMA and its membership of 4,800 risk managers operating in 12 nations on the eve of their 2005 summit meeting to be held next month in Lisbon?

If European risk management leaders can't win a consensus on the transparency issue, FERMA members will have to settle for just plain talk, like the one planned for a session titled "Brokerage in the storm: turning a nightmare into an opportunity?" In this session, brokerage bigwigs will address contingent commissions and the resulting scandals in America.

Beyond the brokerage-commission issue, risk managers will also have the chance to get an update on the industry's hot topics.

Those include enterprise risk management, outsourcing and spreading the gospel of risk management in emerging markets like China, the former Soviet states and Portugal, whose risk management lobby is celebrating its second anniversary.

Opening keynote speaker António Vitorino, former European Commissioner for Justice, Freedom and Security, will deliver a speech titled, "Security in the Enlarged Europe."

Leaders are also expected to stress the importance of setting global priorities, says Van Santen.

"Delocalization and outsourcing issues, intercultural threats, pressure from stakeholders and new regulations throughout the world are all part of the picture," he says.

"How do you manage risks from Europe when many of your activities will be in Asia, Africa, South America?"

For the first time, FERMA will hold its meeting in conjunction with the International Federation of Risk and Insurance Management Associations 4th Worldwide Congress.

With such a diversified and relevant program, FERMA Forum 2005 is sure to shake it up in Lisbon--even if European risk management leaders can't stitch together a coalition to agree on a course of action regarding brokerage commissions.

September 15, 2005

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