Insurers oppose merger of European regulator
The insurance industry opposes ideas put forward in a European Commission consultation to either transfer some conduct of business powers from the European Insurance and Occupational Pensions Authority (EIOPA) to the European Securities and Markets Authority and/or to merge EIOPA with the European Banking Authority.
The consultation is taking place as Britain's departure from the European Union is forcing the European Banking Authority to move from its base in London.
A merger as suggested in the consultation would reduce the effectiveness of consumer protection and prudential oversight, according to Insurance Europe, the European insurance and reinsurance federation.
Such moves would not lead to better EU-level supervision or increased convergence in the way national authorities supervise insurance, Insurance Europe said in a May 16 statement.
“We need a strong, dedicated European insurance supervisor. Insurance is a complex industry that requires a focussed supervisor with a high degree of expertise overseeing all areas of supervision, including both conduct of business and prudential to avoid duplicative and contradictory regulations,” said Michaela Koller, director general of Insurance Europe. “To split insurance responsibilities across ESAs or merge supervisors could put this expertise at risk, and would be a bad result.”
Conduct of business and prudential issues are interlinked and changes would dilute the insurance expertise that EIOPA has built since it was created, Insurance Europe said. Insurers must comply with different regulation from European banks because they have a completely different business model. Therefore, insurers need a supervisor focused on and able to understand their distinct business model, risks and consumer needs.
There is also no evidence that another EU supervisory structure would work better and justify the costs, risks and years of uncertainty that would accompany any significant structural changes. In particular, insurers only recently began working under Solvency II, and other significant regulation will come into force in the next few years, so the European regulatory landscape on which supervisory convergence can be built is new or not yet implemented. It is therefore too early and too risky to make structural changes, according to Insurance Europe.
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