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The existing fragmented landscape of national recovery and resolution frameworks could cause significant barriers to the resolution of insurers, particularly of cross-border groups. To avoid any unnecessary economic costs stemming from uncoordinated decision-making processes between national authorities in different European Union Member States an orderly resolution of cross-border insurance groups is required.
In its Discussion Paper EIOPA recommends a minimum degree of harmonisation applied in a proportionate manner with the objective to avoid fragmentation and to facilitate cross-border cooperation and coordination, providing the European Union Member States the flexibility to address any specificities of their national insurance market.
EIOPA proposes four building blocks of a harmonised recovery and resolution framework for insurers:
Gabriel Bernardino, Chairman of EIOPA, said: “EIOPA provides a snapshot of the current fragmented landscape and paves the way towards a harmonised recovery and resolution framework by proposing the essential building blocks. This framework would be an important step and a key milestone towards a more robust and stable insurance market for the benefit of policyholders. The feedback of stakeholders will enable EIOPA to further develop the proposed framework, which is particularly relevant in fragile market environments, like the current low interest rate environment.”
EIOPA invites all stakeholders to provide their views on the Discussion Paper until 28 February 2017.