Insurance EuropeInsurance Europe
Recovery and resolution

Any new EU proposals should be tailored to the insurance business model

Post-crisis regulation has been implemented to ensure that banks have recovery and resolution plans in place and that regulators have all the necessary tools at their disposal in order to quickly deal with the failure of a bank, thereby limiting contagion of the wider financial system and losses for taxpayers.

European institutions are assessing whether similar special measures are needed to deal with the potential failure of an insurer. We believe that there is no justification for significant further supervisory tools. Insurers also fail in a different way to banks, which means that the systemic risk potential of any failures is limited. In any case, resolution plans should be the last resort, in the rare situation that an insurer ends up at the point of non-viability. In terms of early intervention powers, under Solvency II, supervisors can already intervene as soon as an insurer breaches the solvency capital requirement (SCR) which is significantly higher than the actual minimum capital requirement (MCR).

Our study, “Why insurers differ from banks”, highlights why regulators should consider existing frameworks instead of copying rules applicable to another sector. Any new rules for the resolution of insurers need to be tailored to the unique insurance business model and be proportionate to the objectives of resolution.   

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Position papers
Olav Jones
Olav Jones
Deputy director general/Director, economics & finance
Nicolas Jeanmart
Nicolas Jeanmart
Head of personal & general insurance