EIOPA Publishes Results of Peer Review on Propriety of Board Members
EIOPA published the findings of the peer review examining how national competent authorities assess the propriety of administrative, management, or supervisory body (AMSB) members and qualifying shareholders. EIOPA reviewed national regulatory frameworks and supervisory practices followed by national competent authorities to assess the propriety of AMSB members and qualifying shareholders at the solo and group levels, both at the moment of authorization and on an ongoing basis. Furthermore, EIOPA assessed the effectiveness of cross-border cooperation.
The report presents the overall findings of the peer review, including identified best practices, case studies, and recommended actions. The report reveals that national competent authorities invest considerable resources in the initial assessment of AMSB members and qualifying shareholders. However, these tend to be seen as a one-off task with few national competent authorities undertaking any ongoing assessments as part of their supervisory activities. Ongoing assessment should involve proactive, risk-based, and proportionate engagement resulting from the national competent authorities' own initiative, as part of its supervisory activities. Other areas that were identified as requiring action from national competent authorities were related to the national legislation or regulatory framework, the propriety assessment questionnaires, and the guidance and supervisory records.
The review was initiated following a number of cross-border cases indicating a lack of harmonization in relation to the propriety assessment across the European Economic Area, leading to potentially divergent outcomes in different countries in relation to the same person. The review found that complex cross-border cases of propriety assessment can take a long time, hampered by cumbersome information-sharing processes. In relation to the definition of propriety of AMSB members, a significant variation with respect to whether and when to consider ongoing prosecution and pending investigations for criminal and administrative offences became apparent. Overall, the review resulted in 80 recommended actions for 29 national competent authorities. As a result of this peer review, EIOPA will seek to strengthen and support processes of cross-border assessments.
A key requirement of Solvency II is for insurers to be owned and run by persons of integrity. The primary responsibility to ensure the fitness and propriety of AMSB members at all times rests with insurers, with the national competent authorities conducting their assessment, following the assessment by insurers. Similarly, any acquisition of or changes to qualifying shareholders are subject to review and approval by national competent authorities.
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Keywords: Europe, EU, Insurance, Solvency II, Peer Review, AMSB Members, Cross-border Cooperation, Corporate Governance, EIOPA
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