IMD2
The review of the Insurance Mediation Directive is very relevant for EIOPA, because this Directive affects almost all our stakeholders. Intermediaries are, and will continue to be, a key link in the retail distribution chain. We recognise that at EIOPA, in the same way that we see protection of consumers as a fundamental goal for us and an area where we are required to take a “leading role”. For us, intermediaries are an essential part of the insurance market and play a crucial role in consumer protection.
Therefore, we welcome the publication of the Commission’s proposal to recast the existing IMD (“IMD2”) in July 2012. I must say that it has certainly been a long time in the making ever since the review of IMD1 was first introduced into the Recitals of Solvency II by the European Parliament and then our predecessor, CEIOPS, subsequently provided advice to the Commission on the Directive in 2010 with three different recommendations.
We support the Commission’s objectives of making retail insurance markets work better and promoting a more level playing field by, for example, extending the scope of the Directive to include direct sales. Indeed, preventing regulatory arbitrage and promoting equal conditions of competition are key objectives for EIOPA too.
From EIOPA’s perspective, it is important that the final legislative text creates a regulatory regime in the retail insurance market that can be effectively supervised both from a national and a European perspective, bearing in mind the wide variety of existing structures at national level for supervising insurance distribution.”
Solvency II
The EU is faced with an outdated and fragmented regulatory regime in insurance. Solvency II has been developed during the last 13 years to answer to concrete needs. It increases policyholder protection by using the latest developments in risk-based supervision, actuarial science and risk management. We should be proud that Solvency II is based on sound core principles.
Obviously, the financial crisis had a number of consequences on Solvency II. Some lessons were incorporated early on in the regime, but other challenges are still creating uncertainties on the final design and calibration.
The huge market volatility proved to be a challenge in a market-consistent regime, especially for long-term guarantees. The sovereign crisis led to questions on the concept of the risk-free rate. The changes in banking regulation create pressure on the role of insurers as providers of long-term bank funding. The low interest rate environment is threatening some insurance business models, especially in life insurance. This year will be a crucial year for Solvency II.
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