The European Insurance and Occupational Pensions Authority (EIOPA) published its Single Programming Document (SPD) for 2021-2023. The SPD includes the multi-annual and annual work programme of the Authority.
EIOPA’s sets-out strategic objectives on conduct of business regulation and supervision, convergence in prudential supervision and financial stability. The activities which EIOPA summarises to reach the identified targets strongly emphasise ambitions towards supporting the upcoming regulatory reviews, supervisory consistency and convergence to strengthen the Single Market for insurance.
Insurance Ireland and its members support the priorities which EIOPA identified for itself for the coming years. With regards to the upcoming reviews and the desire for more consistency and convergence, it is important that EIOPA does not separate the two from each other. The EIOPA Opinion on the Solvency II Review presented a mixed outcome with regards to further integrating the Single Market. While EIOPA presented ideas to further enhance cross-border cooperation of National Competent Authorities (NCAs), it also increased the implicit regulatory burden on insurers conducting business across the Single Market compared to domestically acting competitors. Throughout its Opinion, EIOPA marks EU-wide business as particularly risky and creates regulatory backstops. For example, insurers operating cross-border would not be eligible to apply the new proportionality toolbox suggested by EIOPA as their cross-border business would automatically disqualify them. Another example are measures which EIOPA suggests to better reflect macro-risks. Again, the provision of insurance services under the Freedom to provide Services (FoS) and the Freedom of Establishment (FoE) are sufficient to apply the new measures notwithstanding the specific risks inherent in an insurer’s business.
EIOPA will need to step-up and overcome national protectionist interests and potential mistrust among NCAs to effectively contribute to the integration of the Single Market.
With regards to EIOPA’s set objective of “Driving forward conduct of business regulation and supervision”, it will be essential that EIOPA’s activities reflect the importance of consistency across the Single Market without neglecting the particularities of national markets. In contrast to the convergence in prudential regulation, adhering to national particularities based on consumer habits and the market structure does not limit fair competition and consistent consumer protection in the EU. Drawing this important line, EIOPA’s assessments and analysis will be essential for the work of the European Commission in preparation of the regulatory reviews of the Insurance Distribution Directive (IDD) and the Packaged Retail and Insurance-based Investment Product Regulation (PRIIPs).
A central element in these regards will also be the consistency of the process. It is important that EIOPA’s activity acknowledges the upcoming regulatory reviews. Where potential gaps and shortcomings are identified, these should be fed into the legislative process rather than being dealt with in separate own initiatives. While we understand that EIOPA wants to address shortcomings as soon as possible, the inconsistent implementation and application of its non-binding standards can lead to a fragmentation of the Single Markets and a duplication of costs – first for the implementation of the EIOPA standard and then to the adaptation to EU regulation.
A particular example for a misunderstood need for regulatory uniformity and consistency is PRIIPs. The attempt to make products across retail investment markets more comparable failed its purpose. This assessment is confirmed by the ongoing extension of the exemption of fund products from the scope of PRIIPs by Co-Legislators (through the Undertakings in Collective Investments in Transferrable Securities Directive, UCITS). Currently, the European Commission and the ESAs are trying to fix this “broken wheel” through changes in subordinated regulations. However, it is highly unlikely that this attempt will contribute substantially to solving the problems. The time until the review of PRIIPs should be used to assess the problems and identify potential solutions. The Retail Investment Strategy which the European Commission announced for 2022 might provide a more holistic basis for a sound and sensitive regulatory approach. EIOPA together with the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) will play an important role in providing analysis and insight for this strategy.
Insurance Ireland supports the further integration of the EU Single Market and its transition towards a more sustainable and digital economy. Insurers can play an important role in this process. We are committed to contribute the work of Co-Legislators and EIOPA.