12 July 2019

EIOPA consults on the harmonisation of national insurance guarantee schemes

The EIOPA launched a consultation on its Advice on the harmonisation of national insurance guarantee schemes across the Member States of the European Union. This consultation is a draft response to the Call for Advice of the European Commission of 11 February 2019 on the part linked with insurance guarantee schemes.

EIOPA is of the view that every Member State should have a national guarantee scheme in place for the protection of policyholders in the event of a failure of an insurer, which should meet a minimum set of harmonised features. Therefore, EIOPA's calls for the establishment of a European network of national insurance guarantee schemes, which are sufficiently harmonised and adequately funded. At the same time, it is essential to take properly into account the proportionality principle to avoid excessive burdens on insurers and Member States. In this context, a flexible approach as regards the legal structure and set-up of the schemes is important.

The draft Advice addresses the following areas of an insurance guarantee scheme (IGS):

• The role and functioning: The IGS should be set up with the primary aim to protect policyholders, such as to pay compensation swiftly to policyholders for their losses in case an insurer becomes insolvent and/or to ensure the continuation of insurance policies
• The geographical coverage: The IGS should be harmonised in accordance with the home-country principle
• The eligible policies: The IGS should cover a specific range of life and non-life policies, such as policies where the failure of an insurer could lead to considerable financial or social hardship for policyholders and/or in case of lines of business with a high market share in cross-border business in Europe
• The eligible claimants: The IGS should cover natural persons as well as micro- and small-sized legal entities
• The coverage level: The IGS should have a harmonised minimum coverage level
• The funding: The IGS should have adequate funding systems in place. The IGS should for instance be funded on an ex-ante basis and if needed complemented by ex-post funding
• Disclosure: There should be requirements for adequate, clear and comprehensive disclosure about the IGS protection to consumers and policyholders
• Cross-border cooperation and coordination: Respective arrangements between national IGSs should be in place

Furthermore, EIOPA advices to conduct a review of at least every five years after a harmonised framework becomes effective.

Stakeholders are invited to provide feedback by Friday, 18 October 2019 at 23.59 hrs CET.

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