Group supervision and Solvency II review - Overview and critical appraisal of EIOPA’s opinion paper and European Commission Solvency II Proposals -

41 Pages Posted: 13 May 2022

See all articles by Michele Siri

Michele Siri

University of Genoa - Law Department; European Banking Institute; EUSFIL Jean Monnet Center of Excellence on Sustainable Finance and Law; Frankfurt School of Finance & Management; Bocconi University - Bocconi Law Department

Lukas Böffel

European Banking Institute; Free University Berlin; UC Berkeley, School of Law

Date Written: May 2, 2022

Abstract

The review of the Solvency II framework is the biggest and most important regulatory change of the EU insurance regulation since 2014. It tackles both level 1 and level 2 regulations. It has been long awaited and was significantly delayed because of the pandemic. Ultimately, the European Insurance and Occupational Pensions Authority (EIOPA) submitted its opinion of necessary changes to the European Commission (Commission) in 2020. This was preceded by an extensive consultation paper in 2019. One of many important aspects the review touches upon is group supervision which was the centre of attention for this work. Consequently, this paper summarizes, evaluates, and assesses selected aspects of the group supervision review. It is designed as a first take on the current changes and as a basis for further research and discussion. Against this background, it comprises the scope of application of group supervision, third country issues, rules governing the methods for calculation group solvency, and governance requirements. This paper first focusses on EIOPA’s opinion which forms the basis of the Commission’s current proposal. It also entails positions already mentioned within the consultation paper. A critical assessment shows that EIOPA’s suggestions are generally well taken. Importantly, the authority attentively follows a proportionate approach to update the current regulatory scheme. This has to be welcomed amidst significant costs with are aligned with sensible regulatory changes. However, in some regards a greater attention could have been devoted to the positions of the International Association of Insurance Supervisors (IAIS). Subsequently, the Commission’s implementation is assessed. It can be shown that the Commission does not follow or respond to the authorities take in all regards. Generally speaking, this would have been desirable. Also, the Commission’s take leaves some considerable leeway to the Member States and National Competent Authorities (NCAs). This is somewhat contradicting the overall goal of the review to further harmonize the Solvency II regime in the EU. However, it can be expected that the Commission will address some or most of the open aspects at a later stage on level 2 regulations. It remains to be seen if and how the proposed changes carry the desired regulatory improvements. After all, this can be the case in some regards.

Keywords: EU law, Insurance Regulation, Group Supervision, Group Corporate Governance, Insurance Holding Companies, Mixed Financial Holding Companies, Financial Conglomerates, EIOPA, Solvency II Directive, Solvency II Delegated Regulation

JEL Classification: G18, G22, G28, K20, K23

Suggested Citation

Siri, Michele and Böffel, Lukas, Group supervision and Solvency II review - Overview and critical appraisal of EIOPA’s opinion paper and European Commission Solvency II Proposals - (May 2, 2022). European Banking Institute Working Paper Series 2022 - no. 122, Available at SSRN: https://ssrn.com/abstract=4109194 or http://dx.doi.org/10.2139/ssrn.4109194

Michele Siri (Contact Author)

University of Genoa - Law Department ( email )

Genoa
Italy

HOME PAGE: http://unige.it/en/

European Banking Institute ( email )

Frankfurt
Germany

HOME PAGE: http://ebi-europa.eu/members/fellow-academic-members

EUSFIL Jean Monnet Center of Excellence on Sustainable Finance and Law ( email )

Italy

HOME PAGE: http://www.eusfil.eu

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Bocconi University - Bocconi Law Department

Milan
Italy

Lukas Böffel

European Banking Institute ( email )

Frankfurt
Germany

HOME PAGE: http://https://ebi-europa.eu/projects/the-associated-researchers-group-arg/

Free University Berlin ( email )

Boltzmannstr. 3
Berlin, 14195
Germany

UC Berkeley, School of Law ( email )

215 Law Building
Berkeley, CA 94720-7200
United States

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