01 May 2012

EIOPA/Bernadino: Converging ideas - Building a European-wide supervisory culture in insurance and pensions

After what seemed like a flurry of regulatory activity in a relatively short space of time, the European Insurance & Occupational Pensions Authority (EIOPA) was formed in January 2011. It seemed like the body was formed while many in the industry were still wondering how a pan-European insurance supervisor of supervisors could operate in practice without compromising the work of the national authorities. In this article, Gabriel Bernadino, Chair of EIOPA provides a perspective on the Authority's first year of operation.

The establishment of the three European Supervisory Authorities will be recognised as one of the most fundamental reforms in the European financial sector coming from the financial crisis. The potential benefits for the EU internal market coming from the creation of these Authorities are huge, both for the industry and for consumers.

EIOPA’s mission is to protect the public interest by contributing to the short-, medium- and long-term stability and effectiveness of the financial system, for the European Union economy, its citizens and businesses. Since formation in January 2011, it has established a structure, recruited staff and built internal rules, processes and procedures.

With Solvency II implementation dominating the work plan, the last year has seen several important consultations facilitating the preparatory work for firms. It has also provided advice the European Commission for its dialogues on international risk management.

Meanwhile the Authority has progressed its consumer protection remit, publishing an initial overview of Key Consumer Trends, and taking forward work on payment protection insurance, and the use of price comparison websites.

Among the key challenges ahead, the need for robust and realistic risk assessments ranks highly, which has implications on not just firm solvency but also general risk management and consumer protection.

Another challenge will be occupational pensions, where a better risk assessment model is needed to find the right balance between security and affordability objectives. Such a model must reflect the true risks that the different stakeholders are running and help to preserve schemes.

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