On Tuesday, the European Insurance and Occupational Pensions Authority (EIOPA) published a statement on the results of a peer review conducted among National Competent Authorities (NCAs) on their cooperation in the supervision vision of cross-border insurance activity.
EIOPA concludes its peer review with amendments to its existing Decision on cross-border activities of insurance undertakings. The amendments aim at clarifying the responsibilities of home and host authorities and some important adjustments to ensure a consistent approach to the approval process.
In addition to the amendments to its Decision, EIOPA issued a list of 60 recommendations to the NCAs (none addressed to the Central Bank of Ireland, CBI) and a number of identified best practices (in the annexes to its peer review). The measures mainly, but not exclusively, focus on the supervision of business models operating under the freedom of services and the freedom of establishment. NCAs are expected to implement the EIOPA recommendations by Q4 2022
Insurance Ireland greatly appreciates and supports EIOPA’s action in this respect. Improving supervisory consistency and convergence was a main objective of the creation of EIOPA a decade ago. Since then, the organisation made significant progress. The communication at hand promoted improvements in crucial areas of cross-border supervision of insurance undertakings, e.g.:
- Clarification of the EIOPA Decision on cross-border activity with regards to the authorisation and supervisory process;
- More active involvement from host authorities providing lead NCAs with market information and timely market data;
- The creation of data repositories to exchange information between concerned NCAs;
- Concrete steps to improve the transparency of the application process, potential arbitration and jurisdiction shopping.
While we greatly appreciate the strong message from EIOPA, it will be indispensable that the implementation of the new measures does not hinder the further integration of the processes by unduly delay authorisation processes, limit insurers to do business across border or are used as a basis for any protectionist measure taken by individual NCAs.
We call on the CBI to take a similarly leading role on the overall EU supervisory process. National policy and EU advocacy must be stringent in this respect. National divergence needs to be avoided and the common European framework must be promoted to limit the additional regulatory and supervisory burdens on Irish insurers and support competition in Ireland and Europe. Policies like the recently consulted CP131 on pre-emptive recovery planning or the ban on cross-border intra-group transactions, which significantly undermined the EU freedom of capital, have a contradictory impact in this respect. EU-consistent, effective and efficient supervision can be a trademark for Ireland and its role as a global hub for financial services, delivering high-standard consumer protection and fair competition.
The ongoing review of the prudential supervisory framework for insurers, Solvency II, presents the opportunity to further integrate the EU Single Market. The European Commission is expected to present a legislative proposal in 2021. We call on the European Commission to present amendments clearly targeted at improving consistency and convergence of the EU regulatory framework for insurers, including the functioning and governance of cross-border supervision. EIOPA is supposed to deliver its technical advice in preparation of the European Commission’s legislative proposal later this month. Insurance Ireland considers it important that EIOPA recommends further measures in addition to the ones included in this report.
Insurance Ireland and its members are strongly committed to the integration process. Ireland is the 5th biggest market for insurance in the EU and the 2nd largest for reinsurance. Ireland is an international hub for insurance with business written in more than 110 countries, including nearly all EU Member States, serving more than 25 Million customers