Costas Frangeskides, Partner
Holman Fenwick Willan LLP
In this week’s Bulletin:
1. REGULATION AND LEGISLATION
EU: EIOPA Chairman speaks about European supervision in a changing environment and EIOPA’s priorities
UK: Insurance contract law reform: English and Scottish Law Commissions publish updated draft Bill on insurable interest
2. COURT CASES AND ARBITRATION
EU: ECJ considers what is included in “insurance mediation” under the Insurance Mediation Directive
3. MARKET DEVELOPMENTS
UK: IUA publishes Brexit continuity clause
Andrew Bandourka, partner
1. Regulation and legislation
EU: EIOPA Chairman speaks about European supervision in a changing environment and EIOPA’s priorities
The Chairman of the European Insurance and Occupational Pensions Authority (EIOPA) gave a speech at the CIRSF Annual International Conference on 6 June 2018 on “European supervision in a changing environment”.
The Chairman listed the following three “top priorities” of EIOPA:
- Further enhancing supervisory convergence
- Reinforcing consumer protection in an era of digital transformation
- Maintaining financial stability in a changing environment
EIOPA’s main objective regarding supervisory convergence is to ensure policyholders benefit from high-quality and consistent supervision and EIOPA recently published its 2018-2019 Supervisory Convergence Plan, which can be found here. As a result of the Insurance Distribution Directive (IDD) and the Packaged Retail and insurance-based Investments Products (PRIIPs) regulation, EIOPA is now also focusing on conduct of business supervision as a result of the new rules on conflicts of interest, product oversight, and governance and transparency. In EIOPA’s view, National Competent Authorities, i.e. Member State regulatory bodies need to take conduct of business supervision more seriously and coordinate with one another more effectively in crisis situations.
The European Supervisory Authorities currently do not intend to legislate to address changes due to “digital transformation” (such as the production of more personalised consumer products and greater efficiencies in the underwriting and claims management processes) arising from new technologies, digitalisation, Big Data and machine learning. The view is that such legislation would be premature and that EIOPA’s current role should be to monitor developments and call upon financial firms to develop and implement good practices on the use of Big Data.
Finally, EIOPA is focusing on maintaining financial stability and sees a need for adequate recovery and resolution tools to enable national authorities to intervene in failing institutions and resolve failures. The Chairman also stated that while insurance guarantee schemes can contribute to increasing the overall protection of policyholders, there is currently too much fragmentation in the types of guarantee schemes provided. EIOPA is therefore assessing the need and elements of a minimum harmonised approach to insurance guarantee schemes in the EU and a discussion paper will be published before summer.
EIOPA is also currently working on the final paper of three papers addressing systemic risk and macro-prudential policy in insurance as part of the broader discussion of macro-prudential policy following the financial crisis. The final paper focuses on the assessment of the need for further tools to address identified systemic risks.
The Chairman concluded by saying further enhancing supervisory convergence would mitigate risks and improve protection for policyholders. The Chairman acknowledged that the current “political times are not conducive to European solutions” but ended optimistically by quoting the Portuguese poet, Fernando Pessoa: “Stones in the road? I save every single one, and one day I’ll build a castle”.
The full speech can be found here.
