France's two biggest insurers, AXA and AGF, backed away from high-risk commercial insurance this week. AGF has stopped writing new policies for industrial, aviation and transport businesses and AXA in France has gone even further by cancelling existing policies for these sectors.
The problem is reinsurance. Both insurers are concerned that reinsurers will not provide adequate terrorism cover in their policies, meaning AGF and AXA would have to shoulder the costs of claims arising from terrorist action.
No wonder, then, that European risk managers are lobbying the EU to develop a pan-European reinsurance pool (as first reported in Insurance Times two weeks ago) similar to the one set up in the UK after the Bishopsgate bomb.
Interestingly, the same concerns have prompted the Association of British Insurers (ABI) and the British Insurance Brokers' Association (Biba) to lobby government (as first reported in Insurance Times last week), so that cover offered by Pool Re can be extended beyond fire and explosion.
Whether the government's ears are open to the insurance industry is another matter.
A lobbyist recently told me that the Treasury has a "one out of ten" understanding of the industry and little desire to understand more.
The industry is forcing the issue of understanding, though. It has now said unless it receives positive noises about tackling flooding, insurers will stop renewing policies for the worst-hit areas in February (see page 12).
The countdown is on.
