Activities of Johan VAN OVERTVELDT related to 2021/0296(COD)
Shadow reports (1)
REPORT on the proposal for a directive of the European Parliament and of the Council establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012
Amendments (28)
Amendment 38 #
Proposal for a directive
Recital 3
Recital 3
(3) Activities, services or operationServices performed by insurance or reinsurance undertakings that cannot be substituted easily within a reasonable timeframe, or at a reasonable cost for policy holders, beneficiaries or injured parties, need to be seen as critical functioninsurance products that need to be continued. Such activities, services or operationservices can be critical at Union, national or regional level. The continuity of insurance or reinsurance protection is often preferable to the winding down of a failing undertaking as such continuity delivers the most favourable outcome for policy holders, beneficiaries or injured parties. It is therefore crucial that adequate tools are available to prevent failures and, where failures occur, to minimise negative repercussions by preserving the continuity of those critical functions.insurance products. (This amendment applies throughout the text. Adopting it will necessitate corresponding changes throughout.)
Amendment 43 #
Proposal for a directive
Recital 13
Recital 13
(13) It is necessary to ensure the suitability and effectiveness of the recovery and resolution framework while avoiding unnecessary administrative burdens and costs on undertakings and authorities. The implementation of such recovery and resolution framework should therefore be proportionate to the nature, scale and complexity of the undertaking concerned, and of its activities and services. Regarding the scope of the recovery and resolution planning requirements, authorities should determine, on the basis of a harmonised set of risk-based criteria, which undertakings are subject to the planning requirements. To foster trust in the insurance and reinsurance single market and to foster a level playing field, a minimum degree of preparedness should be achieved through laying down a minimum market coverage level. That minimum market coverage level should however take into account the differences between recovery on the one hand and resolution on the other, and the existence or absence of a public interest for taking resolution action.
Amendment 45 #
Proposal for a directive
Recital 14
Recital 14
(14) For the same reason, authorities should, where appropriate, apply different or reduced pre-emptive recovery and resolution planning and information requirements on an undertaking-specific basis, and at a lower frequency of updates. Authorities should, when applying such simplified obligations, take into account the nature, size, complexity and substitutability of an undertaking’s business, its shareholding structure and legal form, its risk profile, its degree of interconnectedness to other regulated undertakings or to the financial system in general. Authorities should also take into account whether the failure and subsequent winding up of the insurance or reinsurance undertaking under normal insolvency proceedings would be likely to have a significant negative effect on policy holders, financial markets, other undertakings, or the wider economy. Authorities should report to EIOPA on the application of such simplified obligations on an annual basis.
Amendment 48 #
Proposal for a directive
Recital 18
Recital 18
(18) It is essential that groups, or where applicable, individual undertakings, prepare and regularly update pre-emptive recovery plans that set out actions to be taken by those groups or undertakings to restore their financial position following a significant deterioration of that position that could pose a risk to their viability. Insurance and reinsurance undertakings should therefore identify a set of quantitative and qualitative indicators that would trigger the activation of remedial actions envisaged in such pre- emptive recovery plans. Such indicators should help insurance and reinsurance undertakings to take remedial actions in the best interest of their policy holders and should not lay down new regulatory prudential requirements. Pre-emptive recovery plans covering all material legal entities within the group should be detailed and should be based on realistic assumptions that are applicable in a range of robust and severe scenarios. Those pre- emptive recovery plans should be an integral part of an undertaking’s system of governance. Existing tools may serve as an input when preparing such pre-emptive recovery plans, including the own risk and solvency assessment, contingency plans or liquidity risk management plans. The requirement to prepare a pre-emptive recovery plan should, however, be applied proportionately and should be without prejudice to the development and submission of a realistic recovery plan as required by Article 138(2) of Directive 2009/138/EC. Where relevant, the elements of the pre-emptive recovery plan could inform or serve as a basis to develop the recovery plan required by Article 138(2) of Directive 2009/138/EC.
Amendment 54 #
Proposal for a directive
Recital 21
Recital 21
Amendment 55 #
Proposal for a directive
Recital 23
Recital 23
(23) Group pre-emptive recovery and resolution plans should be prepared for the group as a whole and should identify measures in relation to both an ultimate parent undertaking and individual subsidiaries that are part of that group. The extent to which subsidiaries are considered in the group pre-emptive recovery and resolution plans should, however, be proportionate to their relevance to the group and to policy holders, the real economy and the financial system in the Member States where those subsidiaries operate. The resolution authorities of the Member States where a group has subsidiaries should be involved in the drawing up of any resolution plans. The authorities concerned, acting within the supervisory or resolution colleges, should make every effort to reach a joint decision on the assessment and adoption of those plans. However, adequate crisis preparedness should not be affected by an absence of a joint decision within the supervisory or resolution colleges. In such cases, each supervisory authority responsible for a subsidiary should have the possibility to require a pre-emptive recovery plan for the subsidiaries under its jurisdiction and make its own assessment of the pre-emptive recovery plan. For the same reasons, each resolution authority responsible for a subsidiary should, for the subsidiaries under its jurisdiction, draw up and keep updated a resolution plan. The drawing up of individual pre-emptive recovery and resolution plans for undertakings that are a part of a group should remain exceptional, duly justified and apply the same standards that are applied to comparable undertakings in the Member State concerned. Where individual pre-emptive recovery and resolution plans for undertakings that are a part of a group are prepared, the authorities concerned should aim to achieve, to the extent possible, consistency with pre-emptive recovery and resolution plans for the rest of the group.
Amendment 56 #
Proposal for a directive
Recital 23 a (new)
Recital 23 a (new)
(23 a) Financial conglomerates risk to be simultaneously within the scope of both the insurance recovery & resolution directive (IRRD) and the banking recovery & resolution directive (BRRD). Two separate directives may thus in the case of financial conglomerates lead to two separate pre-emptive recovery plans and two separate pre-emptive resolution plans. To avoid excessive burden, financial conglomerates should be permitted to draw up one single pre- emptive recovery plan for the whole group. Likewise, it should be sufficient to require the resolution authority to draw up one single pre-emptive resolution plan for the whole group.
Amendment 61 #
Proposal for a directive
Recital 72
Recital 72
(72) EIOPA should promote convergence of the practices of resolution authorities through guidelines that are issued in accordance with Article 16 of Regulation (EU) No 1094/2010. More in particular, EIOPA should specify all of the following: (a) the application of simplified obligations for certain undertakings; (b) the methods to be used when determining the market shares and the criteria for the scope of pre-emptive recovery planning; (c) a minimum list of qualitative and quantitative indicators and a range of scenarios for pre-emptive recovery plans; (d) the criteria for the identification of critical functions; (e) the details on the measures to address or remove impediments to resolvability and the circumstances in which each measure may be applied; and (f) how information should be provided in summary or collective form for the purpose of confidentiality requirements.
Amendment 77 #
Proposal for a directive
Article 2 – paragraph 2 – point 19
Article 2 – paragraph 2 – point 19
(19) ‘critical functions’ means activities, services or operationinsurance products’ means services performed by an insurance or reinsurance undertaking for third parties that cannot be substituted within a reasonable time or at a reasonable cost, and where the inability of the insurance and reinsurance undertaking to perform the activities, services or operationservices would be likely to have a significant impact on the financial system and the real economy in one or more Member States, including by affecting the social welfare of a large number of policy holders, beneficiaries or injured parties or by giving rise to systemic disruption or by undermining general confidence in the provision of insurance services; (This amendment applies throughout the text. Adopting it will necessitate corresponding changes throughout.)
Amendment 89 #
Proposal for a directive
Article 4 – paragraph 1
Article 4 – paragraph 1
Amendment 91 #
Proposal for a directive
Article 5 – paragraph 1 – subparagraph 1
Article 5 – paragraph 1 – subparagraph 1
1. Member States shall ensure that insurance and reinsurance undertakings that are not part of a group subject to pre- emptive recovery planning pursuant to Article 7 and that meet the criteria laid down in paragraphs 2 or 3, draw up and keep updated a pre- emptive recovery plan. Such pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated. A significant deterioration in the financial position is considered to have occurred if the eligible funds fail to cover the Solvency Capital Requirement as laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC [Solvency II].
Amendment 92 #
Proposal for a directive
Article 5 – paragraph 1 – subparagraph 2
Article 5 – paragraph 1 – subparagraph 2
The drawing up, the keeping up-to-date and application of pre- emptive recovery plans shall be considered to be part of the system of governance within the meaning of Article 41 of Directive 2009/138/EC.
Amendment 97 #
Proposal for a directive
Article 5 – paragraph 2 – subparagraph 2
Article 5 – paragraph 2 – subparagraph 2
Supervisory authorities shall ensure that at least 80% of the Member State’s life and non-life and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions, shall be subject tomay require insurance and reinsurance undertakings that risk experiencing a significant deterioration of their financial position to draw up and submit a pre-emptive recovery planning requirements pursuant to this Article.
Amendment 98 #
Proposal for a directive
Article 5 – paragraph 2 – subparagraph 3
Article 5 – paragraph 2 – subparagraph 3
Amendment 101 #
Proposal for a directive
Article 5 – paragraph 3 – subparagraph 2
Article 5 – paragraph 3 – subparagraph 2
Amendment 103 #
Proposal for a directive
Article 5 – paragraph 4
Article 5 – paragraph 4
Amendment 105 #
Proposal for a directive
Article 5 – paragraph 5
Article 5 – paragraph 5
5. Supervisory authorities shall ensure thatmay require insurance and reinsurance undertakings that remain at risk to experience a significant deterioration of their financial position to update their pre- emptive recovery plans at least annually and after a change to the legal or organisational structure of the undertaking concerned, or to its business or its financial situation, which could have a material effect on, or necessitates a material change to, the pre- emptive recovery plan.
Amendment 121 #
Proposal for a directive
Article 7 – paragraph 1 – subparagraph 1
Article 7 – paragraph 1 – subparagraph 1
1. Member States shall ensure that group supervisors may require ultimate parent undertakings to draw up and submit to the group supervisor a group pre- emptive recovery plan when the ultimate undertaking or one of the material undertakings within the group risk experiencing a significant deterioration of its financial position.
Amendment 126 #
Proposal for a directive
Article 7 – paragraph 6 a (new)
Article 7 – paragraph 6 a (new)
6 a. Member states shall ensure that financial conglomerates that are subject to Directive 2002/87/EC of the European Parliament and of the Council are permitted to draft one single pre-emptive recovery plan for the whole group. The group supervisor of the insurance activities shall coordinate with the group supervisor of the credit institution or investment firm.
Amendment 133 #
Proposal for a directive
Article 9 – paragraph 2 – subparagraph 2
Article 9 – paragraph 2 – subparagraph 2
Resolution authorities shall ensure that at least 70% of the Member State’s life and non-life and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions, shall be subject to resolution planning. In the calculation of the market coverage level, the subsidiaries of a group may be taken into account where those subsidiaries are covered in the group resolution plan referred to in Article 10may subject insurance and reinsurance undertakings that risk experiencing a significant deterioration of their financial position to resolution planning.
Amendment 134 #
Proposal for a directive
Article 9 – paragraph 2 – subparagraph 3
Article 9 – paragraph 2 – subparagraph 3
Amendment 138 #
Proposal for a directive
Article 9 – paragraph 5 – subparagraph 1
Article 9 – paragraph 5 – subparagraph 1
5. Resolution authorities shallmay review, and where necessary update, resolution plans at least annually andof insurance and reinsurance undertakings that risk experiencing a significant deterioration of their financial position, and in particular after any material change to the legal or organisational structure of the insurance or reinsurance undertaking or to its business or its financial position that could have a material effect on the effectiveness of the plan or otherwise necessitate a revision of the resolution plan.
Amendment 142 #
Proposal for a directive
Article 9 – paragraph 9 a (new)
Article 9 – paragraph 9 a (new)
9 a. Member States shall ensure that the resolution authorities shall draft one single pre-emptive resolution plan for the whole group, where the group subject to the resolution plan is a financial conglomerate subject to Directive 2002/87/EC of the European Parliament and of the Council. The group resolution authority of the insurance undertakings shall coordinate with the group resolution authority of the credit institution or investment firm.
Amendment 143 #
Proposal for a directive
Article 10 – paragraph 1
Article 10 – paragraph 1
1. Member States shall ensure that group resolution authorities may draw up group resolution plans when the ultimate parent undertaking or one of the material undertakings within the group risk experiencing a significant deterioration of their financial position.
Amendment 145 #
Proposal for a directive
Article 11 – paragraph 3
Article 11 – paragraph 3
3. Member States shall ensure that group resolution plans armay be reviewed, and where appropriate updated, at least annually, and when the ultimate parent undertaking or one of the material undertakings within the group risks experiencing a significant deterioration of its financial position, in particular after any change to the legal or organisational structure, to the business or to the financial position of the group including any group entity, that could have a material effect on or require a change to the plan.
Amendment 167 #
Proposal for a directive
Article 26 – paragraph 2 – subparagraph 2
Article 26 – paragraph 2 – subparagraph 2
Amendment 172 #
Proposal for a directive
Article 26 – paragraph 5
Article 26 – paragraph 5
5. The resolution authority may recover any reasonable expenses properly incurred in connection with the use of the resolution tools or exercising the resolution powers in one or more of the following ways: (a) as a deduction from any consideration paid by a recipient to the undertaking under resolution or, as the case may be, to the owners of the shares or other instruments of ownership; (b) Member States shall ensure that a financing mechanism is in place to that ensures the performance of the obligations deriving from this Directive. This financing mechanism shall at least: (a) cover the expenses arising from the compensation of sharesholution, as a preferred creditor; (c) result of the termination of the operation of the bridge undertaking, the asset and liability management vehicle or the insurance or reinsurance undertaking in solvent run-off, as a preferred creditor.ders, creditors or policyholders as a consequence of Article 55; (b) be based on the home-country principle. from the undertaking under from any proceeds generated as a
Amendment 179 #
Proposal for a directive
Article 34 – paragraph 1 – subparagraph 1 – point b a (new)
Article 34 – paragraph 1 – subparagraph 1 – point b a (new)
(b a) to restore the viability of a failing entity where that is necessary to ensure the continuity of critical insurance products.