Insurance Europe, the European insurance and reinsurance federation, has said it opposes an EU initiative on insurance guarantee schemes (IGS), maintaining that policymakers’ priority should be to ensure Solvency II is applied appropriately in all member states.
The comments came in response to a recent consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on the topic.
IGS at member state level currently vary significantly across Europe, but Insurance Europe believes they generally work well within their local context and law.
It warned that even a minimum level of harmonisation could create significant costs and involve complex challenges with no obvious solutions.
Accordingly, it said policymakers should focus on applying Solvency II and ensure that there is coordinated supervision of re/insurers working cross border under the principles of Freedom of Services (FoS) and Freedom of Establishment (FoE).
“National authorities should be allowed significant flexibility to choose the features for IGS that best suit their market, to reflect the important differences between member states regarding social welfare systems, winding-up process for insurers and insurance product lines,” a statement from Insurance Europe said.
Additionally, it suggested that the failures of insurers operating under FoS/FoE should be addressed in a way that makes the home national supervisory authorities accountable for the failure.
If the European Commission can provide evidence that a minimum harmonisation is necessary, Insurance Europe would favour a home approach combined with host elements, it said.
Such an approach would require a home country to provide all the funding to align with how companies are supervised, while the host country provides the ‘front office’ customer interface for customer, policy and claim identification.
However, Insurance Europe warned that there would be significant operational challenges in applying this model – or any other harmonised approach – across the EU.