01 May 2012

CII: From Brussels with love - A perspective on developing insurance regulation at the EU level

The author, Karel van Hulle, provides some personal reflections on the issues facing the post-financial crisis insurance market, and the responses with the European financial regulatory architecture. He also summarises some principles underpinning insurance regulation at the EU level.

With Solvency II implementation at the forefront of the agenda, a new pan-EU supervisor called the European Insurance & Occupational Pensions Authority (EIOPA) now firmly in place, and some important reforms to general insurance distribution imminent later this month the EU insurance regulatory landscape is now more relevant to individual firms than ever before. And not just in the UK and Europe, but the world over.

Karel van Hulle provides some personal reflections on the issues facing the post-financial crisis insurance market, and the responses with the European financial regulatory architecture. He also summarises some principles underpinning insurance regulation at the EU level.

The main focus of insurance regulation has been consumer protection, stemming from the argument that public trust and confidence in financial markets are keys to financial stability. The need for a level playing field across financial markets, and the importance of recognising differences across member states are also fundamental in the process.

Balancing costs and benefits of regulation are always central in policy development. At the same time, regulation must balance three tenets: it must be proof against possible future market developments and innovations; proportionate to the costs of compliance in the here and now; and mindful of the purpose of the regulation in the first place.

Public consultation are the watchwords in regulatory development, and this now rings true at the European as well as any other level. Undertaking formal consultation at various stages and creating the conditions for stakeholder feedback both individually and collectively is important not just from a political or technical standpoint. They also educate both consultant and consultees on the underpinning issues and motives.

Karel van Hulle then discusses the recent progress of some of the specific briefs on the EU insurance regulatory agenda: Solvency II, Review of the Directive on Institutions for Occupational Retirement Provision, the Insurance Mediation Directive review, and Packaged Retail Investment Products.

Full article

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