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Insurance Industry Regulation

Dáil Éireann Debate, Thursday - 13 December 2018

Thursday, 13 December 2018

Questions (62, 63)

Michael McGrath


62. Deputy Michael McGrath asked the Minister for Finance the implications for regulating authorities, such as the Central Bank, in the European Union which do not enforce the Solvency II Directive and other EU rules in regard to insurance companies effectively; and if he will make a statement on the matter. [52645/18]

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Michael McGrath


63. Deputy Michael McGrath asked the Minister for Finance the role the European Insurance and Occupational Pensions Authority plays in enforcing the Solvency II Directive and other EU rules in regard to insurance; if it has the role of holding national authorities to account; and if he will make a statement on the matter. [52646/18]

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Written answers (Question to Finance)

I propose to take Questions Nos. 62 and 63 together.

At the outset I would like to say that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation, and have no role in the day to day supervision of insurance companies. I have therefore consulted with the Central Bank on the matters raised by the Deputy.

The Central Bank has advised me that all firms conducting business within the EU must comply with the requirements of the Solvency II Directive, which came into force from 1 January 2016. Solvency II was designed to modernise supervision, deepen market integration and increase the competitiveness of European insurers.

EIOPA is part of the European System of Financial Supervision which is an integrated network of national and European supervisory authorities that provides the necessary links between the macro and micro prudential levels, leaving day-to-day supervision to the national level.

EIOPA’s core responsibilities are to support the stability of the financial system, transparency of markets and financial products as well as the protection of policyholders, pension scheme members and beneficiaries. EIOPA is commissioned to monitor and identify trends, potential risks and vulnerabilities stemming from the micro-prudential level, across borders and across sectors.

EIOPA, where necessary, provides for non-legally binding guidelines and recommendations concerning the implementation of the provisions of the Solvency II Directive and its implementing measures in order to enhance the convergence of supervisory practices.

EIOPA and the supervisory authorities of the Member States collaborate closely with each other to facilitate the supervision of insurance and reinsurance within the EU and including the  examination of any difficulties, which may arise in the application of the Solvency II Directive.

National Supervisory authorities are required to inform EIOPA of any major difficulties in the application of the Solvency II Directive and both EIOPA and the supervisory authorities of the Member States concerned in such situation shall examine those difficulties as quickly as possible in order to find an appropriate solution.

In accordance with their founding EU Regulation (1094/2010 EU) ,EIOPA may investigate non-application by national supervisory authorities of the Solvency II Regulations, or their application in a way, which appears to be a breach of Union law, resulting in a written recommendation to that supervisory authority.  Where the competent national authority does not follow the recommendation, the EU Commission may issue a formal opinion taking into account the EIOPA recommendation, requiring the competent authority to take the actions necessary to ensure compliance with Union law.   Finally, in exceptional situations of persistent inaction by the competent authority concerned, EIOPA may, as a last resort, adopt decisions addressed to individual financial institutions.   In addition, EIOPA is required to report regularly and at least every two years to the European Parliament, the Council and the Commission on the progress of the supervisory convergence in the EU.

The Central Bank has indicated that it fully participates, endorses and supports EIOPA’s mandate to contribute to the establishment of high quality common regulatory and supervisory standards and procedures and regularly contributes and provides feedback to enhance such convergence.

In February 2017, EIOPA developed a cross-border platform of cooperation between National Supervisory Authorities, and the Central Bank of Ireland has advised me that they participate fully in these platforms with other relevant supervisory authorities. These platforms provide all National Supervisory Authorities with the opportunity to discuss concerns in relation to specific undertakings, local markets and share general market developments.  It should be noted that as part of the ongoing review of the European Supervisory architecture, there is a proposal to further improve cross-border co-operation and communication through the strengthening of these Cross-Border Collaboration Platforms in order to give supervisors of countries into which insurance is written a greater insight into how the business is being conducted.

Finally, I understand that the Central Bank of Ireland was also part of the EIOPA working group set up to amend the General Protocol to increase the level of information shared between National Supervisory Authorities. In January 2017, EIOPA revised the General Protocol now called EIOPA Decision on the collaboration of the insurance supervisory authorities. The new Decision addresses new flows of information and increased collaboration between supervisory authorities and strengthens EIOPA’s role as the central hub for information collection and sharing.