Recovery & Resolution Plan for Insurers

One of EIOPA’s key responsibilities is to ensure coordinated crisis prevention and management, as well as to preserve financial stability in crisis situations. As part of its approach EIOPA, among others, contributes to the development and coordination of effective and consistent recovery and resolution plans, procedures for emergency situations and preventive measures to minimise the systemic impact of any failure.

Currently, significant differences exist between EU member states in the way of handling an insurer in stress. There is no common EU approach to Recovery and Resolution Planning (RRP) for (re)insurers. Since the EU insurance sector is primarily involved in providing cross-border services, harmonisation across the EU is needed. In 2017 EIOPA published an opinion on the need for harmonising the RRP framework for (re)insurers in the EU. EIOPA is of the view that a minimum degree of harmonisation in the field of recovery and resolution for insurers would contribute to achieving policyholder protection, as well as maintaining financial stability in the EU. Furthermore, harmonisation of existing frameworks would, to a considerable extent, avoid the undesirable situation of having a fragmented landscape of recovery and resolution practices across the Member States, that could impede the orderly resolution process of particularly cross-border insurance groups. According to EIOPA’s view, the building blocks of a harmonised recovery and resolution framework include:

  • Preparation and planning
  • Early intervention
  • Resolution
  • Cross-border cooperation and coordination.
2019
2020
2021
2022
2023
2024
1
Implementation / enforcement 12/2016 - 12/2017
2
Discussion / consultation 12/2017 - 11/2018

STATUS
EIOPA started discusion on EU harmonisation RRP framework.

The proposed harmonisation of RRP frameworks within Europe fits in the ongoing development by the FSB and IAIS of a global RRP framework for global systemically important insurers. As a follow-up to its opinion on harmonization of RRP frameworks, EIOPA published a discussion paper on resolution funding and national insurance guarantee schemes in July 2018. Stakeholders could comment on this discussion up to October 2018. Insurers are advised to closely watch the further developments of the RRP framework.

On a national level, the Senate of the Dutch Parliament adopted the proposed adjustment to the Dutch recovery and resolution Act for insurance companies on 27 November 2018. With this Act, The Netherlands is one of the first countries in Europe to address EIOPA’s call. Implementation of the Dutch Recovery and Resolution Act is expected in January 2019.

Further information:

FSB Key Attributes

EIOPA Opinion on the Harmonisation of Recovery and Resolution Frameworks for (Re)insurers

EIOPA discussion paper on resolution funding and national insurance guarantee schemes

KPMG publication on adjustments to Dutch Recovery and Resolution Act for Insurers

CoE article about EIOPA survey resolution and recovery plans

author
Veronique de Boer-Achmad Senior Manager
Categories: Mortgage Market Organisation