Global Insurance Regulatory Trends and News

EU/US DIALOGUE The European supervisory authority overseeing insurance, EIOPA, the European Insurance and Occupational Pensions Authority, was established as a consequence of the reforms to the supervisory structure...

EU/US DIALOGUE

The European supervisory authority overseeing insurance, EIOPA, the European Insurance and Occupational Pensions Authority, was established as a consequence of the reforms to the supervisory structure of the financial sector in the European Union following the economic crisis of 2007-8.

In the aftermath of the financial and economic crisis, the European supervisory framework was strengthened to reduce risk and severity of future financial crises. EIOPA became part of a European System of Financial Supervisors that comprises three European Supervisory Authorities, one for the banking sector, one for the securities sector and one for the insurance and occupational pensions sector, as well as the European Systemic Risk Board.

As a global organisation, ICMIF has a keen interest in what EIOPA is working on, especially when it involves EIOPA working with other key national or international regulatory organisations such as the National Association of Insurance Commissioners (NAIC), which represents 50+ state regulators for insurance in the United States of America.

In early April of this year EIOPA announced that it had engaged in a high level five-year work plan with the NAIC. There are a number of areas for cooperation that have been agreed by EIOPA and the NAIC (outlined in The Way Forward document published in 2012). ICMIF will be monitoring the initiatives that have been recognised and which relate to solvency and capital requirements in particular. This includes the ORSA (Own Risk and Solvency Assessment), ERM (Enterprise Risk Management), Solvency assessment of solo entities and groups (thanks to a more refined valuation of companies’ risk profiles) and finally, reporting and data collection.

ICMIF will call on the expertise of relevant specialists among the Federation’s member organisations and ask them to participate in the public forum which is planned for late 2013.

Download the EIOPA press release on cooperation with the NAIC here.

EIOPA/WORLD BANK

EIOPA and the World Bank have signed an operational Memorandum of Understanding to cooperate on developing the global insurance sector, which includes promoting a risk-based regulatory and supervisory framework in insurance and the identification of systemic risk and consumer protection.

This could provide ICMIF with a unique opportunity to promote the cooperative and mutual insurance sector. Contact with the person in charge of the Memorandum of Understanding for the World Bank has therefore been established and members will be kept informed of future developments.

Download the EIOPA press release on the Memorandum of Understanding here.

EUROPEAN UNION AND SOLVENCY II PREPARATIONS

EIOPA has recently launched a public consultation on guidelines related to preparation for Solvency II which are due to be launched in Quarter 4, 2013. These are Guidelines which national supervisors (National Competent Authorities, NCAs) throughout Europe and individual insurance companies will be asked to apply from 1 January, 2014 and will signal the beginning of the application of Solvency II. The proposed rules focus on systems of governance (Solvency II Pillar II, risk management and ORSA) and Pillar III reporting requirement to national supervisory authorities.

All NCAs will be expected to ensure that insurance companies take active steps to implement relevant aspects of the Solvency II Directive but, as EIOPA underlines, the implementation will have to be proportionate, so as to ease the burden of implementation on small and medium-sized insurers.

The public consultation on the guidelines is running until 19 June 2013. We would encourage ICMIF members to contribute to the consultation and to also share their thoughts and concerns with ICMIF Vice-President for International Relations, Catherine Hock, at [email protected]

Download the EIOPA press release on the Solvency II Guidelines here.

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