Featured Product

    EIOPA Consults on Harmonization of Insurance Guarantee Schemes

    July 12, 2019

    EIOPA launched a consultation on its advice on the harmonization of national insurance guarantee schemes across the member states of EU. The consultation paper is a draft response to the call for advice by EC on insurance guarantee schemes. The consultation period ends on October 18, 2019.

    EIOPA received, on February 11, 2019, the EC call for advice on the review of Directive 2009/138/EC2 (Solvency II). The call for advice covered a broad variety of topics, including all topics that EIOPA has started to work on such as insurance guarantee schemes and macro-prudential policy in insurance. EIOPA will respond to the call for advice in the form of a Solvency II Review Opinion, which will include a holistic impact assessment. The Solvency II Review Opinion will be published for consultation in the fourth quarter of 2019. The advice in this paper will be amended with the input of this consultation process and be included in the Solvency II Review Opinion, which will be submitted to EC. 

    The draft advice addresses the following areas of an insurance guarantee scheme:

    • Role and functioning—Insurance guarantee schemes should be set up with the primary aim to protect policyholders, such as to pay compensation swiftly to policyholders for their losses in case an insurer becomes insolvent and/or to ensure the continuation of insurance policies
    • Geographical coverage—Insurance guarantee schemes should be harmonized in accordance with the home-country principle
    • Eligible policies—Insurance guarantee schemes should cover a specific range of life and non-life policies, such as policies where the failure of an insurer could lead to considerable financial or social hardship for policyholders and/or in case of lines of business with a high market share in cross-border business in Europe
    • Eligible claimants—Insurance guarantee schemes should cover natural persons as well as micro- and small-size legal entities
    • Coverage level—Insurance guarantee schemes should have a harmonized minimum coverage level
    • Funding—Insurance guarantee schemes should have adequate funding systems in place; they should, for instance, be funded on an ex-ante basis and, if needed, complemented by ex-post funding
    • Disclosure—There should be requirements for adequate, clear, and comprehensive disclosure about the insurance guarantee schemes protection to consumers and policyholders
    • Cross-border cooperation and coordination—Respective arrangements between national Insurance guarantee schemes should be in place

    Overall, EIOPA is of the view that every member state should have a national guarantee scheme in place for the protection of policyholders in the event of a failure of an insurer, which should meet a minimum set of harmonized features. Therefore, EIOPA calls for the establishment of a European network of national insurance guarantee schemes, which are sufficiently harmonized and adequately funded. Additionally, the proportionality principle should be taken into consideration to avoid excessive burdens on insurers and member states. In this context, a flexible approach for the legal structure and setup of the schemes is important. EIOPA advises to conduct a review at least every five years, after the harmonized framework becomes effective.


    Related Links

    Comment Due Date: October 18, 2019

    Keywords: Europe, EU, Insurance, Solvency II, Insurance Guarantee Schemes, Macro-Prudential Policy, Solvency II Review, EIOPA

    Featured Experts
    Related Articles

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004