07 August 2013

EIOPA Annual Report 2012

In the course of 2012, EIOPA continued its work in its seven core areas: regulatory tasks; supervisory tasks; consumer protection and financial innovation; creation of the common supervisory culture; financial stability; crisis prevention, management and resolution; external relations.

Regulatory tasks

The key insurance project to be delivered by EIOPA during 2012 continued to be Solvency II. Whilst 2012 was marked by the continuing negotiations between the European Parliament, the Council and the Commission on the Omnibus II Directive, EIOPA has been active in developing the regulatory provisions to support the Solvency II regime, as well as in supporting national supervisors and insurers to prepare for the new framework.

As a result of the delay in finalising the Omnibus II Directive, on 20 December 2012 EIOPA published an opinion, advising national supervisory authorities (NSAs) to take steps to prepare certain important aspects of Solvency II. In the occupational pensions area, the main focus of EIOPA's work in 2012 was on the finalisation of EIOPA's advice on the review of the IORP Directive. The Advice was delivered to the European Commission on 15 February 2012. EIOPA's advice emphasised the importance of the Quantitative Impact Study (QIS), undertaken between 16 October 2012 and 17 December 2012.

Supervisory tasks

In 2012, EIOPA continued to contribute to the global effort to improve the quality of the EEA supervisory framework, and particularly of the Colleges of Supervisors. In the course of the year, EIOPA contacted all 91 Colleges which are currently active in Europe, and managed to present best practices in 75 Colleges of Supervisors. These exchanges led to lively discussions on macro and micro-economic risks, and the authority provided summaries of EIOPA's Financial Stability Reports, and the EIOPA Risk Dashboard. The authority provided feedback to 17 Group Supervisors on how their Colleges were functioning. With the aim of aligning the supervisory practices with the Solvency II regime, EIOPA participated in question & answer events on established guidelines and recommendations and standards, and gathered questions and best practices from meetings in the Colleges, particularly about the internal models.

Consumer protection and financial innovation

Consumer protection lies at the heart of EIOPA's 'DNA' and it is therefore seen as a high priority for EIOPA in the area of insurance and occupational pensions. The first set of guidelines issued by EIOPA was precisely in the area of consumer protection. More specifically, in November 2012, EIOPA issued guidelines dealing with complaints-handling by insurance undertakings. These guidelines establish consistent, efficient and effective supervisory practices and ensure common, uniform and consistent application of EU law. Furthermore, EIOPA conducted several studies and produced reports on various relevant topics.

EIOPA has written to the European Parliament, the Council and the European Commission to express its concerns about the lack of empowering provisions for EIOPA to issue temporary prohibitions in relation to products/services.

On 4 December 2012 EIOPA held its second Consumer Strategy Day in Frankfurt, which was attended by approximately 200 participants.

Creation of a common supervisory culture

During 2012, EIOPA continued to build up a common supervisory culture in the European Union, through technical training with a strong focus on building common supervisory skills and approaches.

The topics covered in the training events mirror the work of EIOPA, whereby Solvency II is one of the main drivers, followed by Financial Stability, Occupational Pensions, Consumer Protection and Convergence of supervisory practices.

Financial stability

EIOPA's financial stability work in 2012 continued to focus on the early identification of adverse trends, potential risks and vulnerabilities for the insurance and occupational pensions sectors arising from micro and macro-economic developments.

In addition to the surveillance of market conditions, EIOPA carried out regular financial stability assessments in the form of quarterly Risk Dashboards and semi-annual EIOPA Financial Stability Reports. During the course of 2012, EIOPA also examined a number of specific financial stability issues including the significance of insurance in shadow banking, the liquidity swap activities of insurers, and alternative risk transfer techniques in insurance.

Crisis prevention, management and resolution

In early 2012, the EIOPA Board of Supervisors (BoS) agreed upon a 'common approach' to dealing with the financial crisis. In essence, this meant EIOPA adopted a coordinated approach to be followed by EIOPA Members when assessing the impact of the crisis in the following areas: monitoring insurance sector exposures to sovereign and bank risks; liquidity and cash-flow developments in the insurance sector; interconnection between the insurance and banking sectors, for example through liquidity swap and repo activity; and insurers' contingency plans to deal with significant changes in financial asset values.

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