Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-06-06-Speech-1-125"
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"en.20050606.16.1-125"2
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".
Mr President, I am pleased to be able to report to you on this directive. It has been a great honour to be involved in this. We need to thank many of the people working inside and outside this institution: people such as John-Paul Dryden, who fell ill during the report drafting stage and therefore could not help us to finish it. However, Manica Hauptman, who took it over, has devoted a great deal of time and attention to addressing the very deep concerns and the details. The Commission and its staff also played a vital role. I am sure Mr McCreevy is be aware how good his staff can be. Without the help of MEPs and their staff, and I note with appreciation the support from my colleagues across the floor, we could not have reached a fast-track agreement at first reading. We went to fight an election, came back after a time and found this still on our plates and it is quite remarkable that we have managed to deal with it so quickly. The concerns expressed by the House have been eliminated largely because of the agreement and the good work that has gone into it.
The first question is, what is reinsurance? It is about business-to-business, risk and the spread of that risk by the insurance industry. It covers such things as aircraft, ships and buildings. 9/11 and its effects on the World Trade Center were insured by large reinsurance companies such as Lloyds and others for the kinds of catastrophes that we had hoped would not occur. They panicked, but managed to pay their debts. This is a business-to-business directive as well. It involves competition. The central political issue was whether competition was fair at European level and beyond. It was therefore a question of collateral.
Since the value of the reassured risk was collected in banks in the country where the risk was to be covered, it just collected money that did nothing: dead cash, if you like. It was neither effective nor economic. It was an old blunt instrument. It had to be got rid of, because it increased administrative costs and it raised the issue of whether or not the risk was properly covered.
That question then led us to another: the timing of this directive. We worked on a formula that allowed us to consider avoiding the Solvency II discussions, which would come later. The formula would be a form of compromise, with 24 months’ transposition and 12 months’ transition, which I welcomed, through the Luxembourg presidency’s efforts, and agreed to very easily. Parliament was able to vote on this in committee.
Other issues included SPVs, the insolvency issue and captives. Without going into detail on those, I can say that we now have a level playing field at European level. The reinsurance market now has no barriers to trade and it will have a strong supervisory framework across Member States when this directive goes through. Thus it will help EU reinsurance undertakings to maintain their competitive edge around the world. It is a global market and European companies are at the very forefront. In fact, Europe is the second largest market in itself, after the US.
Europe needs to play a role in the rest of the world. The adoption of this text is going to strengthen the hand of the European Union in arguing for an end to the unfair, anti-competitive scam in the United States of requiring non-US companies to pay collateral within the United States, where they are regulated state by state. Do not tell me that the US is a competitive economy: in terms of reinsurance, it is not. So the US now has to reconsider and I know it is doing so. This directive enables us to speak with one voice. Supervisors and regulators can impose higher standards of supervision on third country companies from outside the EU if they wish, rather like the Americans.
There is a possibility of conflict in the world’s rule-making bodies on anti-competitive measures, which we know the US would strongly resist. But there is room for compromise, efficiency and a voluntary initiative.
Let us look at some of the figures. Collateral is required by non-US companies in the United States. It is counted in billions: it is reckoned that USD 40 billion is collected in the US against European companies. There are far more, at a cost of USD 500 million every year. This does not promote efficiency and it does not provide security against risk.
The first blow has been struck with an EU market. With the Commission’s support, the fight will go on. We should congratulate ourselves on this European law, which has brought about significant change both inside and outside Europe."@en1
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