The Commission welcomes the political agreements reached between the European Parliament and the Council on 13 and 14 December on the Commission proposals to strengthen the insurance regulatory framework.
The review modernises the Solvency II Directive by giving better incentives to the insurance and reinsurance (i.e. insurance for insurance companies) sector to invest more in long-term capital in line with the Capital Markets Union objectives, while ensuring it remains solid in difficult economic times and protective of consumers’ interests. The new rules take better account of certain risks, including those related to climate change, and make insurers’ financial strength less sensitive to short-term market fluctuations. A new macroprudential toolkit will also better address the potential build-up of systemic risk in the insurance sector. Moreover, the revised framework introduces simplified and more proportionate rules including for small and non-complex insurance companies, and improves cooperation between supervisors to better protect policyholders across Member States.
The review also introduces a new (re)insurance undertakings’ recovery and resolution directive (IRRD). It will protect policyholders, financial stability and taxpayers in the event of a (re)insurer’s failure. The directive will require larger and systemically important entities to formulate pre-emptive recovery plans to ensure they are prepared for crises. National authorities will have tools to tackle problems with failing (re)insurers, including by taking them off the market in an orderly way while preserving the continuity of the insurance coverage as much as possible. This will achieve the best possible outcome for insured consumers and businesses, in particular when (re)insurers operate in several Member States.
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “These revised rules will ensure that policyholders are better protected in future if their insurer runs into difficulties. We are also making rules simpler for smaller insurers. This agreement takes forward our work to complete the Capital Markets Union and will help to promote the EU’s competitiveness.”
Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “The agreements reached will enable the insurance sector to step up and play its full part in the EU economy. This will foster the participation of insurance companies in the EU’s capital markets, providing the long-term investment that is so vital for a sustainable future.”
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