National competent authorities (NCAs) were expected to advise the European Insurance and Occupational Pensions Authority (EIOPA) by 30 May on whether or not they intend to comply with its guidelines on the supervision of branches of third-country insurance undertakings (the Guidelines) under Solvency II.
The guidelines were published on 30 March 2016 and relate to certain provisions of Solvency II concerning branches of insurance or reinsurance firms established within the European Union (EU) and whose head offices are located in non-EU countries. They do not apply to non–EU firms who solely carry out reinsurance business through its European branch even if it carries out direct insurance through its head office or branches outside of the EU.
The aim of the guidelines is to ensure that policyholders are offered consistent, efficient and effective protection within the EU when dealing with a branch of a non EU insurance firm.
EIOPA were tasked with issuing its Guidelines to NCAs with a view to establishing consistent, efficient and effective supervisory practices to achieve a stable and strong market for financial services in Europe.
The guidelines cover a number of areas ranging from authorisation and financial soundness of the branch to governance and risk management.
NCAs which intend to comply will be required to incorporate the guidelines into their regulatory framework. In the Prudential Regulation Authority’s (PRA) consultation paper1, it confirmed its intention to comply and “take full account of them in its on-going supervision of the new Solvency II framework for third country branch undertakings”.