This article is part of our special report EU policies and the insurance sector.
SPECIAL REPORT / The EU executive is set to launch a broad consultation on the state of the internal market for financial services to gauge how fragmented it is and what can be done to encourage more cross-border activity in the insurance sector.
Final preparations are still under way and the format of the consultation has not yet been agreed internally – although a so-called “green paper” is likely – an EU official told EURACTIV.
It is likely a consultation will be launched during the first half of this year, but this is also yet to be confirmed.
The survey will impact on a number of sectors, such as insurance.
“The internal market for retail insurance products is still fragmented, with obstacles impeding cross-border activities for insurance providers or consumers,” the official said.
The Commission’s statistical data shows that cross-border sales represent only a very small percentage of gross premiums written in the EU.
Different prices for the same products
“Most consumers only buy insurance products in the member state where they live, even though products in other member states may be cheaper and better suited to them,” the official added.
The EU executive has identified price differences on almost identical products – such as car insurance or travel insurance – in different member states.
“There are also issues around geographical limitations on insurance products in terms of coverage, validity and availability,” according to the official.
Insurance groups say that risk differentials explain pricing variations in their products.
“Motor insurance premiums differ not only between member states, but also within member states,” Thomas Ilka, the executive board member responsible for European and international affairs with the Berlin-based German Insurance Association (GDV) told EURACTIV.
“This is due to the fact that risks are different from region to region and, when it comes to cross-border situations, the civil laws ruling liability and damage compensation are not the same in the Member States,” Ilka added.
In an interview with EURACTIV last week (24 April) Gabriel Bernardino, the chairman of the European Insurance and Occupational Pensions Authority (EIOPA), described the internal market for insurance as “still insufficiently integrated”.
EIOPA – an independent advisory body to the European Parliament, the Council and the Commission – monitors and identifies trends, potential risks and vulnerabilities stemming from the micro-prudential level, across borders and across sectors.
“The concept of ‘cross-border’ can only work if protection is consistent between member states,” Bernardino said in the interview, explaining: “This is a crucial point: strong consumer protection across all jurisdictions is I believe a precondition for a flourishing and integrated single market.”
The aim of the consultation will be “to get a clearer picture of the fragmentation of markets, the causes for the low cross-border business, consumer expectations and consequences for competition and consumer protection,” the official said.
On the basis of the gathered evidence the Commission will decide “what should or could help the EU insurance market become more cross-border,” he explained.