Les folios

Another year over, pop the Champagne; a world disappearing, but what’s to remain?

As 2011 comes to a close, we see ourselves in a period of history wherein a collective feeling of anxiety is merging with an every-man-for-himself philosophy. Where do such notions come from? Nations and other bodies, but also individuals surrendering to the lure of ultra-consumerism.

On November 9, 2011, the European Commission adopted proposals for two action programs in support of health and consumers. The programs are anticipated to run from 2014 until 2020, with budgets of €446 million and €197 million respectively. Their goal is to “foster a Europe of healthy, active, informed and empowered citizens, who can contribute to economic growth”.

The health program, entitled “Health for Growth”, aims to support and complement the work of Member States around a limited number of concrete actions in pursuit of the following four objectives:

•    Developing innovative and sustainable health systems;

•    Increasing access to better and safer healthcare for citizens;

•    Promoting health and preventing disease;

•    Protecting citizens from cross-border health threats.

According to John Dally, European Commissioner for Health and Consumer Protection, the goal of these programs is to keep European citizens “healthy and active for longer”, which “is good for people and good for jobs and growth”. He says that “the two programs will make a significant contribution to achieving Europe 2020 goals – to create smart, sustainable and inclusive growth by the end of this decade”.

These proposals will now be discussed by the European Parliament and Council of Ministers, with a view to adoption by the end of 2013. This will allow the new “Health” and “Consumer” programs to begin in 2014.

Download the program “Health for Growth”

According to results published on July 28 by Eurostat, the European Union statistics agency, the population of the European Union (EU27) was 502.5 million inhabitants as of January 1st 2011, an increase of 1.4 million people compared to January 1st 2010 and an annual growth rate of +2.7‰. This rate is the result of natural population growth (+1.0‰) combined with the net migration rate (+1.7‰).

As for the Eurozone (EZ17), its population has also increased by 1 million people (an annual rate of +3.1‰) going from 330.9 million inhabitants on January 1st 2010 to 332.0 million as of January 1st 2011. This represents natural growth of +1.0‰ and a net migration rate of +2.1‰.

In 2010, within the EU27, 5.4 million children were born, the birth rate remaining unchanged at 10.7 births per thousand inhabitants. The highest birth rate was recorded in Ireland (+16.5‰) and the lowest in Germany (+8.3‰). Over the same period, there were 4.8 million deaths, representing a gross mortality rate of 9.7 deaths per thousand inhabitants. The highest mortality rate was observed in Bulgaria (+14.6‰) and the lowest in Ireland (+6.2‰). The difference between these two rates corresponds to natural population growth, the highest being observed in Ireland (+10.3‰) and the lowest in Germany and Romania (-2.2‰).

It was further noted that population growth in the EU27 is due predominantly to migratory movements (60%), with the highest net migration rate being that of Luxemburg, at +15.1‰ and the lowest that of Ireland, at -7.5‰.

Globally, the highest relative increase in population is that of Luxemburg (+19.3‰), and the lowest that of Lithuania (-25.7‰).

The European Parliament recently published a study commissioned by the Dutch organization Research voor Beleid on the role of mutuals in the 21st century.

The study first addresses the history of mutuals in Europe, their economic weight, as well as their role and their place in the EU. It differentiates in particular between mutual benefit societies (or health mutuals) and insurance mutuals (covering all types of risks, life and non-life). A section is also dedicated to the role of mutuals in social protection.

In a section addressing the internal European market, the study emphasizes the apparent tendency towards homogenization, and the risk that mutuals may be compelled to act increasingly like joint-stock companies, or to become “demutualized”. It considers that mutuals can be defined, through their activities and their organizational legal status, as economic or non-economic “public-interest social services”. The study emphasizes the importance of creating a statute for European mutuals, noting that various institutions (Commission, Parliament) recently expressed their will to re-table the initiative.

In a chapter dedicated to mutuals in an evolving economic context, the study indicates that mutuals which acquire capital solely through their members rather than through capital markets seem more resilient when faced with financial and credit crises, and are thus more sustainable. They also tend to deal more directly with the insured parties. Yet in a very competitive market, the disadvantage for mutuals is not having easy access to (venture) capital. At the same time, this limited access to capital tends to make them less dependent and insures greater balance between owners, creditors / insured, with a more long-term orientation.

Finally, the last section on the future role for mutuals in Europe identifies a few important challenges for the near future. Especially with demographic change, the need for social protection will become more and more pronounced. The private sector will be expected to assume ever greater responsibilities to insure social security. Mutuals therefore have a key role to play in the future. They could develop their services and assume a more important role in the pension market. The study maintains that a statute for European mutuals could be particularly useful in order to work across borders, but also to foster greater awareness of mutuals in the development of future European policies.

Regulations to limit risk selection or skimming practices and the creation of mechanisms to balance out risks could be implemented as well.

In conclusion, the study affirms that mutuals still have an important place and offer added value for the European economy and for society as a whole.

The role of mutual societies in the 21st century