In its consultation response, Insurance Europe has expressed “serious concerns’’ about the European Insurance and Occupational Pensions Authority (EIOPA)’s draft Supervisory Statement (Statement) on the supervision of reinsurance concluded with third countries (re)insurance undertakings.
1. Clarity of objectives, scope and nature of the document
Insurance Europe notes that it is unclear what problem EIOPA is aiming to address. The federation further argues that the choice of a Statement is disproportionate and overreaching, and using an alternative tool, such as a supervisory handbook, would be more appropriate.
2. Legal framework and interaction with equivalence decisions and international agreements
The Statement, Insurance Europe adds, imposes conservative expectations and additional burdens on National Competent Authorities (NCAs) and (re)insurers, potentially discouraging the use of reinsurance capacity from third countries. Worryingly, the draft Statement is essentially bypassing the Solvency II framework, including the European Commission’s equivalence decisions. Insurance Europe calls for the Statement to clarify its interaction with these equivalence decisions and the EU-US Covered Agreement, and not override them. This includes recognising the distinctions between equivalent and non-equivalent jurisdictions.
3. Importance of the competitiveness of the European (re)insurance industry
In its response, Insurance Europe reiterates the importance of open reinsurance markets to support competition and keep prices low. The industry also warns of the risk of reciprocity by other jurisdictions, in case of restricted market access for non-EU reinsurers to the EU, potentially making EU reinsurance less attractive overseas.
4. Emphasising the benefits of cross-border reinsurance
Insurance Europe calls for the Statement and impact assessment to be revised to highlight the importance of global market access, including achievements such as equivalence decisions and the EU-US Covered Agreement.
5. Consistency and clarity of EIOPA's approach
Finally, Insurance Europe calls for consistency in EIOPA’s approach to reinsurance. EIOPA itself identified reinsurance as a crucial element to addressing the insurance protection gap, yet the Statement on third country reinsurance conveys a different – and potential conflicting – message on reinsurance. Cross-border reinsurance and access to global capital play a key role in addressing the protection gap, and this needs to be reflected in the Statement.