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11 June 2014 1
WP3 - Insurance Mapping Update & Recommendations
By Thomas Dunand, Hannover Re
Forum Meeting 6, DG ENTR, Brussels
11 June 2014 2
Schedule M
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WP3- Insurance schemes
3.1 Update of the mapping of insurance regimes in the EU-27 made in Elios 1 pilot project
3.2 Review of different mechanisms that exist to protect investors’ interests
3.3 Information needs about construction insurance
3.4 State of the art of insurance schemes in the EU-27 and transition paths
3.5 Analysis of conditions for greater mutual recognition of construction insurance regimes
3.6 Recommendations for policy formulation
90 %
90 %
85 %
80 %
90 %
85 %
11 June 2013 3
Next steps
• Integration of TSI in the Mapping• Visit of German contacts• Final recommendations
11 June 2013 4
Update of the mapping
• Significant modifications for:– Croatia– Austria– Netherlands– Norway– Spain
11 June 2014 5
Significant modifications
Other Member States
Update of the mapping
11 June 2013 6
Recommendations
• Two main categories of recommendations for improving the accessibility to construction insurance:– Improving the access process to the existing
“construction systems”– Modifying the “construction systems”
themselves
11 June 2014 7
Improving the access process
Insurance
Technology
Culture
Wealth
Userpractices
Environmental conditions
Legal framework
Markets
Insurance
Technology
Culture
Markets
Userpractices
Environmental conditions
Wealth
Legal framework
System Configuration Country A
System Configuration Country B
11 June 2013 8
Improving the access process- through transnational communication
• By increasing the insurance offer*:– Improve failure forecast of innovative technologies through
information sharing (EQEO) + Hazard notification procedure– Improve risk assessment through Quality Signs information
sharing (WP1) + Improve “relevancy” of existing quality signs (e.g. extension of ETA toward climatic conditions or installation considerations)
– Harmonize TIS accreditation / recognition by insurers– Promote a European IDI cover
(*) to accompany a contractor abroad or to meet a foreign request
11 June 2013 9
Improving the access process- through transnational communication
• By facilitating the subscribing procedures:– Add to the existing Points of Single Contact sites a specific
standardized* “construction insurance access” administrative procedure guide
– Add Elios mappings to the PSCs– Require their Update by the Member States– Add to PSCs a national complaint submission procedure– Add to Solvit an EU level complaint submission procedure,
transmitted to an European construction insurance ombudsman
(*) language, fields, format …
11 June 2014 10
Improving the access process- through international communication
Proposal Pros Cons
EQEO • Real current lack of information exchange
• Should clarify real problems / usefulness of information
• Available information from public sources only
• Confidentiality• Financing
Hazard notification procedure
• Efficient (if carried out as proposed)
• Implementation
Quality Signs Database • Real current lack of information
• Usefulness for insurers
• Based on a voluntary contribution
• Absence of gradingImprove quality signs • Improvement of relevancy
/ usefulness for insurers• Calls into question
current approach• In-depth / long-term
work
11 June 2014 11
Improving the access process- through international communication
Proposal Pros Cons
EU TIS accreditation • Harmonization of TIS to support insurance
• Made by whom for whom?
Promote an EU IDI • EU Members benchmarking of consumer protection
• Difficulty to reach / inform owners
Proposal Pros Cons
Access Procedure Guide
• Pragmatic solution to accessibility difficulties
• Rectifies current situation
• Effectiveness of enforcement / implementation
Add Elios mapping to PSCs
• Concentration of the information
• Difficulty to reach / inform owners
11 June 2014 12
Improving the access process- through international communication
Proposal Pros Cons
Update of mapping by Member States
• Quality of information• Update cost transfer
• Effectiveness of enforcement
PSCs Complaint submission procedure
• Objectivation / Realization of accessibility problems by governments
• None
Solvit Complaint submission procedure
• Ease of use• Standardization of
feedback sources
• None
EU level Ombudsman • Allow to find real pragmatic solutions to accessibility difficulties
• New expense for EU
11 June 2014 13
Modifying the “construction systems”
Insurance
Technology
Culture
Wealth
Userpractices
Environmental conditions
Legal framework
Markets
Insurance
Technology
Culture
Markets
Userpractices
Environmental conditions
Wealth
Legal framework
System Configuration Country A
System Configuration Country B
11 June 2014 14
Modifying the “construction systems” Current level of guaranties*
Level of protection
Non consequential Financial Loss
Consequential Financial Loss
Whole building
Thirdparties
Thirdparties
Non consequential Financial Loss
Consequential Financial Loss
Whole Building
Damage to the work itself
Start of Work Handover + 10 years
(*) of contractors, architects, engineers, inspectors
11 June 2014 15
Modifying the “construction systems” Desired level of guaranties*
Level of protection
Non consequential Financial Loss
Consequential Financial Loss
Whole building
Thirdparties
Thirdparties
Non consequential Financial Loss
Consequential Financial Loss
Whole Building
Damage to the work itself
Start of Work Handover + 10 years
(*) of contractors, architects, engineering firms, inspectors
11 June 2013 16
Modifying the ”construction systems”
• By setting new regulation:– Require from all EU Members a common minimum level
of guarantee* on solidity / stability of the contractors, architects, engineers and inspectors’ liability (construction work value for contractors, percentage of the Total Construction Value for “designers”)
– Include in the Freedom to Provide Service the obligation to satisfy the “host Member” State’s regulation instead of the “home Member” which leads to an insurance race to the bottom
(*) whether contractual or legal; and of property or liability type
11 June 2014 17
Modifying the “construction systems”- by setting new regulation
Proposal Pros Cons
Set a minimum level of guarantee for contractors and designers
• Reduces the gap between countries, hence facilitates transnational activity for both firms and insurers
• Increases the protection of consumers
• The guarantee has to be fitted to widely different national systems (legislation, regulation …)
• Resistance to harmonization
Modify Freedom to Provide Service law from “home state” law to “host state” law compliance
• Stop of this unfair competition which leads to a race to the bottom in consumer protection
• None
11 June 2013 18
Energy Performance Guarantees
• Review:– Huge hurdles to insure individual houses and dwellings:
• Dependency on consumer’s behaviour• Separation of appliances vs building consumption (inherent
performance of the building)• Need of equipment maintenance (ventilation)
• Recommendations:– Standardise the conventional performance definition
and calculation– Promote electrical installation which permits “inherent
performance” measurement
11 June 2014 19
Debate
• What are the hurdles to the adoption of harmonised minimum guarantees?
• Therefore, is transnational communication the only path toward harmonisation?