14 October 2013

EIOPA/Bernardino: Interview with the Irish Broker (Ireland)

EIOPA has been in existence for almost three years. What do you think are your achievements in insurance and occupational pensions since the establishment of the Authority?

In the insurance area our main achievements are related to the implementation of the Solvency II framework. This year we produced the Long-Term Guarantee Assessment and are finalising the report on the possible calibration and design of regulatory capital requirements for insurers’ long-term investments under Solvency II. I am confident that EIOPA’s independent supervisory assessment as a core element of these two important studies provides a reliable basis for an informed political decision on the long-term guarantee measures to be included in Solvency II.

Another important achievement is our work on preparing of supervisors and undertakings for Solvency II implementation. In September this year, following the public consultation, EIOPA published the final Guidelines on preparing for Solvency II. These Guidelines aim to ensure that national supervisory authorities will put in place certain important aspects of the new prospective and risk based supervisory approach from 1 January 2014. I am confident that these Guidelines are an important step towards consistent and effective supervisory practices in the preparation for the Solvency II implementation. They will play an important role in supporting the good function of the internal market in the insurance sector and will ensure a higher quality of information.

We believe that there has been a great deal of operational convergence between the Member State supervisors since the establishment of EIOPA, in particular with the concept of a college of supervisors becoming a reality. Do you agree and if you do what do you think the results of this will be over time?

I fully agree: participation in the colleges of supervisors is one of the priorities in our work. Every year we prepare the Action Plan for colleges, monitor its implementation and in the end of the year produce the reports about functioning of the colleges. We are also participating in joint on-site inspections. In order to support the supervisors in their preparation for Solvency II, EIOPA is setting up a Centre of expertise in internal models. This work requires from us a thorough knowledge of different EU countries, their economic and business culture, in order to ensure more coordinate validation and supervision of internal models. (travelling, participating in teleconferences, all types of negotiations). Our final objective - to guarantee consistent, coherent and effective EEA-wide supervision of cross-border insurance groups - is worth those efforts!

As the readers of this journal are both intermediaries and insurers both life and non-life, what impact do you think EIOPA is likely to have on their lives/business already or indeed in future years?

Since the very first year of our existence we call for a paradigm shift on transparency and fairness towards consumers. In order to regain the trust and confidence of consumers, insurers need to develop more simple and understandable products, devote further attention to the fairness of contractual conditions and to review the charges and commissions applied, ensuring that they are not disproportionate. Furthermore, insurance companies need to develop a new approach towards conflicts of interest because “bad behaviour" in this area will not continue to be tolerated.

We want to make sure that consumers receive the appropriate degree of protection and that their benefits outweigh any related costs. This is a change that every single insurance company and intermediary will need to implement.

How, based on your experience of the last few years, do you see the role of national supervisors like the Central Bank of Ireland evolving in the context the establishment of the three ESAs including EIOPA ?

I will not exaggerate if I say that in the European System of Financial Supervision, national supervisors play a role of the system’s “eyes” and “ears”. They are in charge of daily supervision and, thus, have a direct link to industry, collect information and statistical data from companies and are aware of all the developments on the national markets. All the working groups and committees of EIOPA consist of experts from national supervisors, including the Central Bank of Ireland. And I am convinced that only like this we can create the common supervisory culture – by basing our work on the expertise and best practices of all the EU Member States.

Furthermore, two main decision-making bodies of EIOPA – the Board of Supervisors and the Management Board – comprise the national supervisory authorities of the European Economic Area. EIOPA Management Board is in charge of preparing the Board of Supervisors’ meetings, it adopts our policy plans, budget expenditures et c. Since the existence of EIOPA and until June 2013, one of the Management Board members was Matthew Elderfield, Deputy governor Financial Regulation of the Central Bank of Ireland. Matthew contributed a lot to all EIOPA initiatives and projects and we are very thankful for all the work he has done and for his truly European spirit.

As you are aware next year after the European elections we will have a new EU Parliament and Commission. How do you think this will influence or impact upon EIOPA and its work going forward?

I am confident that in their next composition the Parliament and the Commission will have the same vision that the ESFS and EIOPA in particular should keep fulfilling its twofold mission which is to protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, and on the other hand to protect the rights of policyholders, pension scheme members and beneficiaries and to contribute to the public confidence in the European Union’s insurance and pensions sectors.

Full interview

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