Next event: Vote in plenary scheduled 2024/04/23 more...
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations 2024/01/29
- Coreper letter confirming interinstitutional agreement 2024/01/24
- Text agreed during interinstitutional negotiations 2024/01/24
- Committee decision to enter into interinstitutional negotiations confirmed by plenary (Rule 71) 2023/09/13
- Committee decision to enter into interinstitutional negotiations announced in plenary (Rule 71) 2023/09/11
- Committee report tabled for plenary, 1st reading 2023/07/26
- Vote in committee, 1st reading 2023/07/18
- Committee decision to open interinstitutional negotiations with report adopted in committee 2023/07/18
- Amendments tabled in committee 2022/07/18
- Committee draft report 2022/06/02
- Economic and Social Committee: opinion, report 2022/02/23
- Contribution 2022/01/04
- Committee referral announced in Parliament, 1st reading 2021/11/22
Progress: Awaiting Parliament's position in 1st reading
Role | Committee | Rapporteur | Shadows |
---|---|---|---|
Lead | ECON | FERBER Markus ( EPP) | LALUCQ Aurore ( S&D), YON-COURTIN Stéphanie ( Renew), HAHN Henrike ( Verts/ALE), ZANNI Marco ( ID), VAN OVERTVELDT Johan ( ECR), MACMANUS Chris ( GUE/NGL) |
Committee Opinion | JURI |
Lead committee dossier:
Legal Basis:
TFEU 114
Legal Basis:
TFEU 114Subjects
Events
The Committee on Economic and Monetary Affairs adopted the reported by Markus FERBER (EPP, DE) 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.
As a reminder, the aim of this proposed directive is to make the insurance and reinsurance sector more resilient and enhance the protection of policyholders, taxpayers, the economy and financial stability within the EU. Moreover, the new directive will provide a framework for cases where the Solvency II regime does not prevent the failure of an insurance undertaking. The Insurance Recovery and Resolution Directive (IRRD) will provide harmonised resolution procedures, making failures of insurance companies easier to handle, especially in a cross-border context.
The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows:
Scope
The amended text reinforces the role of the European Insurance and Occupational Pensions Authority. The EIOPA should be informed of any additional or stricter rules adopted by Member States, other than those laid down in the directive.
Resolution plans
Members added that the resolution plans should also contain a preliminary assessment of the feasibility and credibility of the winding up under normal insolvency proceedings or of resolution actions. Resolution authorities should draw up resolution plans for each insurance and reinsurance undertaking that is subject to pre-emptive recovery planning requirements provided they assess that the public interest would be positive in the event of a failure or for which a critical function exists. This assessment should be made on the basis of the resolution objectives and criteria such as size, business model, risk profile, interconnectedness, substitutability and cross-border activity .
Group resolution plans
The amended text suggested that Member States should ensure that group resolution authorities draw up group resolution plans to be activated in case the ultimate parent undertaking or one of the material undertakings within the group risks experiencing a significant deterioration of its
financial position.
Financial arrangements
Financing arrangements should be established in each Member State to compensate policy holders of insurance and reinsurance undertakings authorised in that Member State. While directly absorbing the losses of an insurance company should be avoided, it should be possible to use such financing arrangements to finance other costs associated with the use of resolution tools as a last resort, to the extent necessary to achieve the resolution objectives and insofar as the resolution principles are fully respected. Acknowledging the diversity in insurance markets, Member States should be given some flexibility in relation to the precise arrangements of external financing as long as the availability of sufficient liquidity to guarantee compensation within a reasonable timeframe is ensured. A Member State should impose a contribution obligation only to insurance and reinsurance undertakings authorised in that Member State and to Union branches of a third country undertaking which are established in its territory.
Policy-holder protection
The report stated that the global financial crisis showed the need for high levels of protection for policy holders. The introduction of insurance guarantee schemes (IGSs) should therefore be advanced. A harmonised framework of national insurance guarantee schemes would help to minimise reliance on public funds by providing equal protection to policy holders and beneficiaries in the event of an insurer’s insolvency. The current lack of homogeneity between national IGSs leads to unequal treatment of policy holders and beneficiaries of to the same insurer, as demonstrated by recent cross-border insurance failures. After sufficient experience in the application of this Directive has been gained, the Commission, after consulting EIOPA, should evaluate and report to the European Parliament and the Council on the possibility of introducing harmonised minimum basic requirements for insurance guarantee schemes in the Union and the steps that would be necessary in order to do so.
Review
By 1 January 2026, the Commission, after having consulted EIOPA, should submit a report to the European Parliament and to the Council on the application of this Directive.
PURPOSE: to establish a European framework for the recovery and resolution of insurance and reinsurance undertakings.
PROPOSED ACT: Directive of the European Parliament and of the Council.
ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.
BACKGROUND: insurance policies form an integral part of the daily life of European citizens. For many social and economic activities, holding an insurance policy is necessary to protect against potential risks. They also include savings products, which will determine the long-term welfare of their holders. The disorderly failure of insurers can therefore have a significant impact on policy holders, beneficiaries, injured parties or affected businesses. The management of a near-failure or the failure of certain insurers, particularly large cross-border groups, or the simultaneous failure of multiple insurers can also lead to or amplify financial instability.
Although Directive 2009/138/EC (Solvency II Directive) of the European Parliament and of the Council aimed at strengthening the financial system in the EU and the resilience of insurance and reinsurance undertakings, it did not completely eliminate the possibility of failures of such insurance and reinsurance undertakings.
Moreover, there are currently no harmonised procedures at European level for resolving insurers . This results in considerable substantive and procedural differences between the laws, regulations and administrative provisions that govern the failure of insurers in the Member States. A regime is therefore needed to provide authorities with a credible set of resolution tools to intervene sufficiently early and quickly if insurers are failing or likely to fail to ensure a better outcome for policy holders, while minimising the impact on the economy, the financial system and any recourse to taxpayers’ money.
CONTENT: the proposed Directive seeks to harmonise national laws on recovery and resolution of insurers or introduces such a framework if there is none yet, to the extent necessary to ensure that Member States have the same tools and procedures to address failures. The harmonised framework would also safeguard the interests of policy holders and preserve the real economy. It would contribute to financial stability and trust in the internal market for insurance and reinsurance.
The proposal addresses crisis management and provides for a comprehensive package of measures including, inter alia , the following elements:
Prevention and preparedness
The proposal requires insurance and reinsurance undertakings established in the EU and subject to the ‘Solvency II’ regulatory framework to develop preventive recovery plans, in order to be better prepared for a possible crisis and to be able to take prompt remedial action if a crisis occurs.
Set-up of resolution authorities
This proposal requires Member States to set up insurance resolution authorities , equipped with a minimum harmonised set of powers to undertake all the relevant preparatory and resolution actions. The proposal does not specify the particular authority that should be appointed and can therefore be for example national central banks, competent ministries, public administrative authorities or other authorities entrusted with public administrative powers.
Resolution tools
The framework would provide national authorities with resolution tools to intervene early and quickly enough in the event of failure or risk of failure of insurers. These instruments would maintain insurance cover for policyholders, beneficiaries and injured parties and allocate losses in a fair and predictable manner.
Cross-border group resolution
To take account of the cross border nature of some insurance groups and create a comprehensive and integrated framework for recovery and resolution actions in the Union, resolution colleges will be established under the leadership of the group resolution authority and with the participation of the European Insurance and Occupational Pensions Authority (EIOPA). The objective of the colleges is to coordinate preparatory and resolution measures among national authorities to ensure optimal solutions at Union level.
Changes to the Solvency II Directive
This proposal clarifies supervisory authorities’ powers to impose preventive measures to insurers in cases of deteriorating financial positions or breaches of regulatory requirements, to avoid the escalation of the problems at a sufficiently early stage of deterioration.
Penalties
In order to ensure compliance by insurers, those who effectively control their business and their administrative, management or supervisory body with the obligations deriving from this proposal, Member States should provide for administrative sanctions and other administrative measures which are effective, proportionate and dissuasive. EIOPA should maintain a central database of all administrative sanctions.
Implementation
The proposal requires Member States to transpose the recovery and resolution rules in their national laws within 18 months from the entry into force of this proposal. National authorities should report to EIOPA on the application of simplified obligations on an annual basis, which EIOPA should in turn disclose.
Documents
- Approval in committee of the text agreed at 1st reading interinstitutional negotiations: PE758.182
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)000531
- Text agreed during interinstitutional negotiations: PE758.182
- Committee report tabled for plenary, 1st reading: A9-0251/2023
- Amendments tabled in committee: PE732.672
- Committee draft report: PE732.670
- Economic and Social Committee: opinion, report: CES5378/2021
- Contribution: COM(2021)0582
- Legislative proposal published: COM(2021)0582
- Legislative proposal published: EUR-Lex
- Economic and Social Committee: opinion, report: CES5378/2021
- Committee draft report: PE732.670
- Amendments tabled in committee: PE732.672
- Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)000531
- Text agreed during interinstitutional negotiations: PE758.182
- Contribution: COM(2021)0582
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