- European Parliament votes to adopt an agreement reached between the EU institutions regarding the review of the European system of financial supervision
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17th April 2019
European Parliament votes to adopt an agreement reached between the EU institutions regarding the review of the European system of financial supervision
Yesterday, the European Parliament voted to adopt an agreement reached between the EU institutions regarding the review of the European system of financial supervision. In response, Olav Jones, deputy director general of Insurance Europe, comments “Insurance Europe welcomes the result of today’s vote. The agreement reached will help to maintain the European Insurance and Occupational Pensions Authority (EIOPA) as a strong, standalone supervisor for the EU insurance industry, while maintaining the important role of national supervisory authorities.”
Specifically, Insurance Europe welcomed these technical aspects of the agreement:
-Governance. EIOPA’s board of supervisors(BoS) will remain the main decision-making body and the current Management Board is retained. This will ensure national supervisors have the final say in decisions that impact them directly. However, Insurance Europe also welcomes that EIOPA will be able to directly set up panels to address breaches of EU law and cases of cross-border disputes.
-Internal models. It is positive that national supervisors remain responsible for the oversight of internal models. The close links between an insurer’s model, its risk profile and governance mean that such oversight must remain with the actual supervisor. EIOPA can, if requested by a supervisor, provide technical advice and help resolve disagreements.
-Stress tests. The status quo is maintained and EIOPA has not been empowered to request disclosure of results at an individual level. This is welcome because the focus of the two-yearly insurance stress test exercise is to identify adverse market developments and not to create a new, and potentially confusing, basis for individual company solvency. Solvency II is designed and calibrated for solvency purposes and, being itself a stress test-based system, means individual company information is already published.
-Anti-money laundering. The role of the European Banking Authority is strengthened in relation to anti-money laundering(AML) supervision for all financial institutions, but EIPOA has been given a role in the decision-making of the internal AML committee. This is welcome, as it should help ensure the specific nature of insurance is taken into account.
-Funding. The current mix of funding from national competent authorities and the EU is maintained.
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