Insurance Europe welcomes the opportunity to respond to the Commission's consultation on recovery and resolution which encompasses financial market infrastructures and the insurance sector. Insurance Europe focuses its response on recovery and resolution plans for insurers and the wider debate on systemic risk.
Insurance Europe understands that, in the wake of the 2007-08 financial crisis, there is a need to assess whether sectors other than banks are prone to generate systemic risk and what measures might be needed to prevent a failure of such institutions impacting financial stability.
This being said, Insurance Europe finds the approach adopted by the consultation in addressing these concerns somewhat confusing. In particular, Insurance Europe is concerned about the fact that the Commission seeks to identify the right approach in terms of recovery and resolution to address systemic risk concerns in the absence of consensus about the sources of systemic risk in insurance.
Insurance Europe would therefore consider it vital first to identify the potential sources of systemic risk in insurance and then to work on ways to address the related concerns. Enhanced recovery and resolution could be considered as being one among several tools that could be used. Other and possibly more effective tools would include appropriate risk management and supervisory practices.