Insurance compensation schemes will not be established on a pan-European level
The European parliament is pushing for Europe’s new insurance super-regulator to be given powers to directly intervene in companies’ affairs.
The Brussels-based parliament is locked in negotiations with the EU’s two other key institutions – the Council of Ministers and the European Commission – over the framework for a new system of financial regulation.
The three institutions held the latest of their so-called ‘triologues’ to thrash out the new regulator’s powers earlier this week.
Under the shake-up, Ceiops (Committee for European Insurance and Occupational Supervisors) – the umbrella body for the EU’s insurance regulators – will mutate into the new and more powerful European Insurance and Occupational Pensions Authority (Eiopa).
The Council of Ministers, which represents the EU’s member state governments, has vetoed the parliament’s proposals to give Eiopa general powers to regulate insurers that operate across Europe.
But the parliament is digging in its heels over its demand that Eiopa should have powers to take direct action over companies in ‘emergency situations’.
In such circumstances, the parliament wants Eiopa to have the power to step in over the head of national regulators, like when companies are flouting EU law.
In a debate on financial regulation in the parliament last week, Liberal Democrat MEP Sharon Bowles said: “Cross-border insolvency and near-insolvency in financial institutions have to be tackled at the European level.”
ABI director of financial regulation and taxation Peter Vipond welcomed moves to create a “strong and capable” regulation at the European level. “That said, we believe day-to-day supervision is best placed with the national supervisors, though we accept the need for a lead supervisor with a college of supervisors for those insurers with cross-border operations.”
In a separate development, the commission announced that it has decided not to establish a pan-European insurance compensation scheme.
A white paper published on Monday consults on proposals for each member state to set up its own national insurance guarantee scheme, like the UK’s FSCS.
Vipond said: “This is potentially very good news for European consumers. The new compensation arrangements should give policyholders a common level of protection across the EU. This is a much more pragmatic way forward than seeking an EU-level compensation scheme – something that would have been very hard to get agreement on.”