Europe’s insurance industry has welcomed the improvements agreed today by the EU’s co-legislators – the European Council and Parliament - to the Insurance Recovery and Resolution Directive (IRRD). Insurance Europe however continues to question the need for such an extensive regulation given the existing regulation and safeguards that are in place.
Proposed by the EU’s executive – the European Commission – the IRRD aims to further tighten regulation of the insurance industry and creates additional powers for authorities in the event of insurer failures. The IRRD will create significant additional operational burdens for many companies and requires resolution authorities to be established in all EU member states. It also gives new powers to these authorities and to existing supervisors to intervene in a company’s operations even when it meets all of the extensive Solvency II requirements.
Angus Scorgie, Head of Insurance Europe’s prudential regulation & international affairs and reinsurance, remarked, ''The insurance industry shares the Directive’s objective to ensure very high levels of consumer protection. Nevertheless, we remain sceptical of the Directive’s added value because the Solvency II prudential regime already ensures policyholders are very well protected and supervisors have the powers to deal with the limited financial stability risks presented by the insurance sector. We will need to assess the costs and burdens it will add for companies during the next stage of technical talks’.
Insurance Europe has previously called for assurances that the IRRD will not go beyond international standards and doesn’t create unnecessary burden on the industry.