Dáil Éireann Debate, Thursday - 13 December 2018
65. Deputy Michael McGrath asked the Minister for Finance if he has raised issues with his European counterparts regarding insurance regulation, consistent enforcement of European insurance regulation and the need for compensation mechanisms to be put in place across the EU; the dates on which these issues were raised; and if he will make a statement on the matter. [52648/18]
Amharc ar fhreagraAt the outset, the Deputy should note that I am very conscious of the problems caused in recent years by a number of non-life companies passporting into the Irish market particularly on the motor side. I am very unhappy that supervisors in the authorising countries in question have not done their job adequately, and as a result the Irish Compensation Fund and by extension, Irish policyholders have had to pay the price for these failures. On the other hand, however, Ireland is a major beneficiary of the cross border passporting regime particularly on the Life insurance side. In addition, as you are aware all interested observers of the Irish motor insurance market in recent years have been signalling the need to make it more competitive by encouraging new entrants. Generally because of the relatively small scale of the Irish market most new entrants will be freedom of service operators. Consequently, whilst there are undoubtedly some problems with the passporting model, it is likely that consumers would have greater difficulty getting competitively priced cover in its absence.
In relation to engaging at European level, my officials attend the Commission Expert Group on Insurance issues which is held at least three times per year (e.g. 6 February, 29 May and 20 September 2018 this year). This Group provides a forum to discuss issues such as the consistent application of Solvency II as well as proposals for any amendments to the Directive including Commission Delegated Regulations. As it has been some time since the Council has discussed insurance matters I have not to date directly raised with my European counterparts issues regarding insurance regulation, consistent enforcement of European insurance regulation and the need for compensation mechanisms to be put in place across the EU. However, the Deputy can be assured that as and when appropriate I will do so.
At present, there is no harmonisation of insurance guarantee schemes across Europe. However, there have been a number of reports and initiatives in this area in recent years including:
- A 2010 Commission white paper on the introduction of an EU wide framework of Insurance Guarantee Systems. No significant progress was made on this framework subsequently as the development of Solvency II was the priority piece of work.
- A 2015 Commission discussion paper on the possibility of introducing a recovery and resolution regime for insurance undertakings which could include an Insurance guarantee Scheme.
- In 2017 the Commission issued a questionnaire to all Member States seeking information on Recovery and Resolution including experiences with failures and near-failures of insurers.
- The European Systemic Risk Board published a report “Recovery and Resolution for the EU insurance sector: a macro prudential perspective” in August 2017. The Central Bank of Ireland was represented on the drafting team.
- EIOPA published an Opinion to Institutions of the European Union on the Harmonisation of Recovery and Resolution Frameworks for (Re) Insurers (July 2017).
- Work is also underway at an EIOPA level, where a project group has been set up to examine more broadly recovery and resolution within insurance and in relation to Insurance Guarantee Schemes, a discussion paper was published on this topic:
https://eiopa.europa.eu/Publications/Consultations/EIOPA-CP-18-003_Discussion_paper_on_resolution_funding%20and.pdf
Recently, in May 2018 the European Commission proposed an amendment to the Motor Insurance Directive which would oblige member states to set up Insurance Guarantee Schemes to cover the cost of insolvent motor insurers. This is still subject to negotiation so the technical details are being worked out, but you can rest assure that my Department and the Central Bank are continuing to work closely with their European counterparts on this issue.
Finally, while the provision of cross-border insurance is an essential part of the Single Market, it is acknowledged that there are obvious difficulties which arise when an insurer fails. It is important that EU supervisors properly and consistently supervise the insurers that they authorise, and that there is greater communications between supervisors across the EU about their respective companies conducting cross-border business. 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 Cross-Border Collaboration Platforms. These already operate on an ad-hoc basis, however this proposal would ensure a more formal structure is put in place where an insurer is doing a lot of cross border business. This would therefore give the supervisors of countries into which insurance is written a greater insight into how the business is being conducted.
