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Insurers oppose EU wide initiative on insurance guarantee schemes

Insurance Europe has said it opposes an EU initiative on insurance guarantee schemes (IGS), in response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on the topic.

IGS at member state level currently vary significantly across Europe, but generally work well within their local context and laws. Insurance Europe warned that even a minimum level of harmonisation would create significant costs and involve complex challenges for which there may not be acceptable solutions.

The priority for policymakers should instead be to ensure that Solvency II is applied appropriately in all member states and that there is coordinated supervision of insurers working cross border under the principles of Freedom of Services (FoS) and Freedom of Establishment (FoE).

National authorities should be allowed significant flexibility to choose the features for IGS that best suit their market, to reflect the important differences between member states regarding social welfare systems, winding-up process for insurers and insurance product lines. In addition, the issue of failures of insurers operating under FoS/FoE should be addressed in such way as to make the home national supervisory authorities accountable for the failure.

Insurance Europe also said that, if after considering all elements provided, the European Commission can provide evidence that a minimum harmonisation is necessary, the preference would be for a home approach combined with host elements. This is where the home country provides all the funding to align with how companies are supervised and the host country provides the “front office” customer interface to facilitate customer, policy and claim identification as well as communication in local language. However, Insurance Europe warned that there would be significant, and potentially intractable challenges at the operational level in applying this, or indeed any harmonised approach, across the EU.

Published 22 October 2019