24 July 2012

EIOPA publishes report on role of IGSs in winding-up procedures of insolvent insurance undertakings in EU/EEA

This report is prepared as part of EIOPA’s input to the European Commission’s policy-making on Insurance Guarantee Schemes (IGSs) and as specified in the mandate of the Task Force on Insurance Guarantee Schemes.

A questionnaire was used for the purpose of this exercise and sent to 30 EU/EEA states. 24 Member States responded. Where references are made to the majority or minority of Member States, this refers to the number of respondents rather than the full membership of the EU/EEA.

For the purpose of this report, an IGS is a body that provides last-resort protection to consumers when insurance undertakings are unable to fulfil their contractual commitments. Motor insurance guarantee schemes are covered in this report only to the extent that they provide cover in such winding-up situations. An IGS may have a wide ranging scope, covering life, non-life or both types of insurance contracts. In the majority of Member States’ jurisdictions, only certain classes of insurance contracts are covered.

The following areas are covered in this report:

1. types of IGSs (the diversity of IGSs in the EU/ EEA, cross-border IGS membership and the permanent or ad hoc character of the IGS);
2. role of the IGS prior to insolvency (formal or informal pre-warning systems, free exchange of information between the IGS and the supervisory authority and preventative measures taken by the IGS);
3. role of the IGS in the insolvency process (deciding when to intervene, options for exit from insolvency, continuance of coverage, criteria taken into account by an IGS for portfolio transfer, role of the IGS when an insurance undertaking becomes insolvent, cross-border cooperation and coordination arrangements);
4. role and interaction of other bodies with the IGS (role of the supervisory authority, differences between life and non-life insurance insolvency and their treatment by the supervisory authority);
5. role of the court in winding-up proceedings when the insolvency procedures are initiated and/or throughout the insolvency or the winding-up procedures; and
6. role of the IGS in the claims process (time limit for claims payments and observed payment times, treatment of unearned premia, funding payment of claims, rights of policyholders to take the IGS to court, payment of claims upfront and reimbursement, subrogation rights of the IGS, other rights and rights of creditors).

Full report

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