Insurance Europe response to the EC’s consultation on the review of the EMIR

17 August 2015

In its response, Insurance Europe indicated that there are not sufficient possibilities for long-term investors, such as insurers and pension scheme arrangements, to transfer non-cash collateral with central counterparties.

Therefore, Insurance Europe believes that there are two possible solutions to address the concern of cash:

• Consider a permanent exemption from the central clearing obligation for both pension funds and insurance companies that use derivatives for hedging.
• Encourage central counterparties (CCPs) to develop tailored solutions for both pension funds and insurance companies, allowing for non-cash collateral as variation margin.

Other key messages are:

• It should be clarified that European Market Infrastructure Regulation (EMIR) does not apply to insurance products.
• The obligation for dual-sided reporting (DSR) should be removed and replaced by a requirement for one-sided reporting.
• The obligation to backload closed trades is costly and operationally cumbersome, while adding little value to the effectiveness of the EMIR regulatory regime.
• The delays in the finalisation of implementation rules for EMIR and lack of clarity around requirements have  led  to  market  players  making  assumptions  and  proceeding under  uncertainty ,  and  resulted  in planning  issues  for the insurers concerned due  to unclear  timescales  and a lack  of  formal commitments.

Full response

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