The draft prepared by the european authority, pending publication of the final opinion, will apply to the remuneration of certain professionals of insurance and reinsurance companies.
Last July 25, the European Insurance and Occupational Pensions Authority – EIOPA – published its draft opinion on remuneration in the insurance and reinsurance sector (Consultation Paper on draft Opinion on the supervision of remuneration principles in the insurance and reinsurance sector). The rules on remuneration contained in that document will apply to the personnel of insurance and reinsurance companies who are in any of the categories listed below, whose annual variable remuneration exceeds 50,000 euros and represents more than one-fourth of their total annual remuneration:
- Members of the board of directors, management or supervisory bodies.
- People who effectively manage the company.
- Those who perform key functions, as defined in EIOPA’s Guidelines on the system of governance.
- Categories of personnel whose professional activities have an important impact on the entity’s risk profile (material risk takers or MRTs).
Although the final opinion is currently awaiting publication, it is important to highlight the following aspects specified in that document, which may have a relevant impact on the remuneration of this group of personnel, on similar terms as those established for credit institutions:
- The scope of the principle of proportionality, taking into account the thresholds specified by that document, and with the resulting effects in relation to the application of clauses on deferral, payment in shares and clauses for the reduction (malus) and recovery (clawback) of the variable remuneration.
- Balance between fixed and variable remuneration, and the possible establishment of a maximum ratio for variable components over fixed components of remuneration.
- Tools for measuring the alignment of remuneration with risk.
- Measures applicable in the case of payments for termination of contracts.