On 30th June 2021, EIOPA published a Decision on the collaboration of the Insurance Supervisory Authorities (hereafter: the Decision). EIOPA picks-up a number of the key asks which the Irish insurance industry brought forward to regulators and supervisors over the last three years – namely to upgrade supervisory platforms to regular, standing and digital tools for the exchange of information and coordination of supervision. The Decision can mean a significant step forward towards a more consistent, efficient and effective supervision of cross-border services across the single market for insurance.
It will now be up to the European Commission to establish the necessary governance for a consistent and convergent operation of (cross-border) supervision in its legislative proposal for the review of the Solvency II Directive.
The EIOPA Decision confirms the establishment of supervisory platforms as a regular mechanism and not only its use as ad-hoc and emergency tools. Its Decision further aims to formalise the information exchange between home and host national competent authorities (NCAs), define duties and responsibilities for both as well as procedures for the coordination between supervisory colleges and platforms. EIOPA also states that it will develop the IT structure to support the collaboration.
The main ask from the Irish insurance industry which has not been reflected by EIOPA is that the establishment of (digital) supervisory platforms is mandatory. The EIOPA Decision still leaves the discretion for the Decision with (home) NCAs. Insurance Ireland considered this discretion critical as potential arbitrary application of the common rulebook might extent to the notification and establishment processes among NCAs.
The last EIOPA report on the collaboration of NCAs highlighted that 11 percent of insurance services in the EU are provided cross-border with a steady increase over the past years. Only a very small fraction of providers creates risks for consumers and the integrity of the EU single market for insurers mainly due to operating on unsustainable business models. Different standards in supervision by NCAs and limited effectiveness of cross-border collaboration have been identified as major threats. The EIOPA Decision will further improve the cross-border supervisory process. However, a strong legal basis for the operation of cross-border supervision is necessary.
According to the EIOPA report, the Central Bank of Ireland (CBI) is a very positive example with regards to the cross-border collaboration with its peers. Insurance Ireland and its members strongly support the CBI on this journey. EU consistent regulation and supervision are key factor for the success of the Irish insurance market in Europe and globally.
Gold-plating on EU standards or arbitrary implementation and application of these standards present significant threats to consistent consumer protection and fair competition in the EU single market for insurance. The European Commission’s legislative proposal for the review of the Solvency II Directive and EIOPA’s efforts for consistent supervision are an enormous opportunity. Insurance Ireland believes that a strong Irish voice in Brussels and Frankfurt should support integration, convergence and consistency to the benefit of consumers and insurers alike.