The Federation of European Risk Management Associations (FERMA) has urged the European Commission to exempt insurance policies from EU public procurement regulations, arguing that the current framework prevents public sector organisations from securing adequate cover.
In a position paper submitted to the commission’s consultation on revising the EU Public Procurement Directives, FERMA said the existing rules create “market inefficiencies, inequalities, and negative impacts for public buyers of insurance coverage”.
The federation said public sector risk and insurance managers face overly cumbersome requirements when purchasing policies under the directives. It argued the rules fail to account for the volatile and cyclical nature of insurance markets, leaving public bodies at a disadvantage.
According to the paper, the administrative burden discourages insurers from taking part in public tenders. This reduced competition can lead to limited insurance capacity, weaker coverage terms, and potentially higher premiums than those available to private sector organisations.
FERMA called for insurance policies to be excluded from the scope of the directives, similar to existing exemptions for loans and other financial products. It said such an exclusion would remain consistent with the directives’ overall objectives while better serving public sector needs.
Laurent Nihoul (pictured), FERMA’s chief executive, said accessible insurance is critical to public resilience.
“Access to sufficient and affordable insurance coverage is vital to the resilience of public sector entities and is in the best interests of citizens, who ultimately bear the losses sustained by the public sector when risks are not transferred to the insurance market,” he said.
Nihoul added that rigid procurement procedures are poorly suited to insurance markets.
“Rigid public procurement procedures are not well suited to insurance and discourage insurer participation, reducing capacity, weakening coverage, and potentially increasing premiums for public sector entities,” he said.
He drew parallels between insurance and other financial services already exempt from the directives.
“Like other financial services already excluded from the PPD, insurance operates in fast-moving markets where prices and conditions change rapidly,” Nihoul said. “Excluding insurance from the scope of the Directives would therefore be a logical and consistent step, helping to ensure public-sector access to sufficient and affordable insurance in the interest of resilience and citizens alike.”
The position paper is available on FERMA’s website.
