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20 November 2018

EIOPA: Insurance and pensions: Securing the future


Gabriel Bernardino, Chairman of EIOPA, spoke about EIOPA’s achievements and priorities over the past and coming year: Solvency II and its review, achieving supervisory convergence and consumers' rights.

Solvency II and its review

In short, Solvency II has helped to strengthen the position of insurers across Europe.

But good regulation is only as good as it remains relevant. It must remain fit for purpose if it is to continue to achieve the fundamental objectives of policyholder protection and market stability. The insurance landscape is evolving: business models are evolving to make use of more advanced technology, new risks are emerging, not least in the area of climate change, and the importance of sustainable finance continues to grow. Therefore, Solvency II must also evolve.

“Achieving supervisory convergence”

In particular, EIOPA has built up and coordinated the so–called cooperation platforms with home and host supervisors to look at concrete cases of companies with cross–border activities and their supervision. To date EIOPA has coordinated 13 platforms involving national supervisors from many

different countries. For each platform, EIOPA provided concrete supervisory recommendations to the home supervisor. In some instances, these recommendations were aimed to strongly encourage the home supervisory authority to initiate intrusive interventions towards the firm, such as prohibition of writing new business, in order to limit the risk to prospective policyholders.

The business models of the companies subject to a cooperation platform differ significantly, from motor insurance, French construction business, medical malpractice insurance to complex unit-linked products. In general, the focus of the companies is on growth outside the home market and on long-tail business where the risk will only materialize on the medium to long-term. Usually, there are deficiencies in the data available, insufficiencies in technical provisions and complex intermediation structures. The impact of failure of such companies can cause significant waves in the host markets and severely disrupt public trust in the functioning of the internal market.

The supervision and enforcement of the new requirements is essential to ensure the desired increase in consumer protection. It is EIOPA’s expectation that all the national competent authorities reinforce their market monitoring activities, deepen their knowledge about the products sold in their markets and effectively take supervisory measures to stop eventual bad practices. It is time to take conduct of business supervision seriously.

“Working for consumers”

For consumers, much of our work is intangible. Companies are supervised, crises are minimised, risks are mitigated and consumers, for the most part, are untouched. But more and more consumers are seeing the evidence of EIOP‘s work in their daily financial lives especially through the information that they receive from providers.

Going forward it is a priority for us to ensure that consumers are not overloaded with information, which they do not understand and do not use. A deep analysis of the current disclosure requirements in place for insurance products in different parts of the European legislation is needed in order to streamline it, eliminate duplications, layer the information and make sure that the result is ready for the digital economy. This should ensure that simpler, more targeted and standardized information is offered to consumers while limiting the burden on the industry.

Full speech



© EIOPA


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