27 February 2014

EIOPA/Bernardino: The Ambition of EIOPA - Making a difference for Europe and its citizens

In a nutshell EIOPA wants to contribute to:

• Well informed policy-holders and pension scheme members who get a fair deal and can trust that the promises made to them will be fulfilled.
• Financial markets that are stable and resilient to shock.
• A well-functioning internal market which contributes to a strong European economy.

Management guru Peter Drucker said that the only thing we know about the future is that it will look different. And indeed it will. EIOPA will witness sound risk-based prudential regulation, insurers that adequately deal with consumer needs and expectations, and a more consistent and effective supervision within the EU and globally. But these achievements will not drop down on EIOPA like manna from heaven. This leads to EIOPA’s work and plans.

In the nearby future EIOPA will gradually shift the focus and the emphasis in its work:

• After finalising the regulatory work on Solvency II, EIOPA will put more efforts to supervisory convergence and effectiveness.
• EIOPA will reinforce its attention on pensions, both occupational and personal pensions.
• EIOPA will further develop our consumer protection agenda.

Solvency II

A project that started 13 years ago is now in the phase of finalising. Solvency II is a mission that sometimes resembles running a steeplechase. In spite of all the fences and water we met, we should be proud of the result. It may not be the perfect framework (there are no perfect frameworks), but it is a major step forward.

Following issuing the preparatory guidelines by EIOPA in October 2013 we are now at the beginning of a preparatory phase of two years. Our objective is to allow national supervisors and insurers to get familiar with all the requirements and give them the opportunity to set up the necessary structures and processes... The better the preparation will be, the more effective the framework will be.The European Union will benefit from stronger and more coordinated supervision at European level. At EIOPA we are creating the basic conditions and taking the appropriate steps to build a credible and respected supervisory authority. A supervisory authority that is open to frank and transparent dialogue with all stakeholders.

Following the publication of the level 2 delegated acts by the EU Commission in the summer, EIOPA will deliver during 2014 and 2015 the technical standards and guidelines necessary to finalise the regulatory work. And we will do so in a transparent and participative way using proper consultation processes.

When this framework will be put into practice in 2016, it is a moment of great importance. We will see a robust framework that captures the economic reality of the asset-liability position of insurers and that brings capital much closer to the insurers risk profile. Furthermore, and extremely important, Solvency II will promote a strong risk culture and will stimulate insurers to develop strong risk management capabilities. This is good news for undertakings, for consumers, and for society as a whole.

(...)

Looking at the challenges ahead I think that we need to create the appropriate conditions for EIOPA to perform an independent assessment of the way the regulatory framework is implemented in practice in the different Member States. This independent assessment is a key component for the development of consistent supervisory practices in the EU and to ultimately build an EU supervisory culture.

In order to perform this task in an effective and efficient way there are three conditions that need to be addressed:

Firstly an appropriate budget framework that will ensure the overall efficiency of the Authority, reinforce its operational independence and ensure the necessary human and financial resources…

Secondly, in order to ensure an adequate and consistent level of supervision, for the benefit of consumer protection and financial stability, the current power of EIOPA to conduct an inquiry into a particular type of financial institution, type of product, or type of conduct, should be extended. This power should not be confined to situations of potential threats to the stability of the financial system but be used more generally to support the independent assessment of supervisory practices.

Thirdly, it is essential to avoid the burdensome case-by-case discussions on EIOPA’s access to individual company information. Going forward, EIOPA should obtain access to the information included in the harmonised templates developed for Solvency II.

Full speech

© EIOPA