Insurance Europe has responded to a set of six consultations by EIOPA which focus on various aspects of the Insurance Resolution and Recovery Directive (IRRD).
The incoming requirements for the insurance sector of the newly developed IRRD were agreed by the co-legislators earlier this year. EIOPA’s consultations provide further detail on how the requirements will be implemented by insurance companies and resolution authorities.
The insurance industry has previously raised concerns about the potentially disproportionate requirements of the IRRD. The proposals included in EIOPA’s consultations add to, rather than address, the industry’s concerns, in particular:
- Operational and reporting burdens: The proposals risk leading to extensive direct and indirect requirements on undertakings, increasing the administrative burden for the industry. EIOPA should explicitly reinforce the importance of proportionality in applying these standards, noting the Commission’s wider simplification agenda.
- Prescriptive and detailed requirements: Requirements for how information should be presented should not be overly prescriptive, as size, needs, and approaches will vary among undertakings.
- Wide scope: Very few of an insurer’s activities will be excluded from the scope of potential critical functions, going beyond the mandate provided in the IRRD.
- Timing: Given timing constraints for insurance companies are significantly less than in the banking sector, insurance companies should not be required to establish BRRD-style reporting processes for resolution planning. Instead, they should be permitted to re-use existing business-as-usual processes as much as possible.
- Interactions with Solvency II: The final guidance should explicitly promote consistency with existing Solvency II disclosures and should not introduce requirements beyond the existing strong regulatory framework.
- Treatment of groups: The current proposals lack clarity on the treatment of groups and should be amended to avoid duplication, both between solo undertakings and groups and between banking and insurance components of conglomerates.
The responses are here: