Yesterday the Association of British Insurers (ABI) released a report entitled “The Insurance Industry: Rebuilding Confidence in Europe,” outlining “a three-stage plan to help restore confidence and trust in European financial services.” ABI’s membership “constitute[s] over 90 per cent of the insurance market in the UK and 20 per cent across the EU.” The report was issued in conjunction with the ABI Board’s meeting and discussions with senior European officials in Brussels.
The report notes that the financial crisis has weakened “the institutional framework that governs the regulation of financial services at [the] EU level.” A failure of national authorities to address responses to the crisis uniformly has created a risk of “further fragmentation of supervision along national lines.” The report urges the EC to adjust the present regulatory framework to “improve transparency for investors” and create “stronger corporate governance arrangements.” In addition, the report stresses that the following principles must underline “any new legislation or proposed solutions” to the present financial supervisory framework:
- regulatory reform that is targeted and both risk and principles based;
- focus on the importance of consumer needs; and
- emphasis on a global response and the dangers of protectionism.
Mr. Stephen Haddrill, the ABI’s Director General, stated that, “[d]ecisive but considered action is needed from Brussels. Confidence and trust must be regained, and calls for protectionism challenged. We must now look carefully at both radical and evolutionary ways forward, including the possibility of a single European prudential supervisor. Consumers and businesses deserve all options to be explored to ensure we emerge from this crisis stronger.” He further noted that “[a]ny plan of recovery must recognise that cross-border financial organisations will lead the recovery of Europe’s economy.”
Last month the European Commission announced its adoption of several proposals intended to enhance and strengthen the existing framework for EU supervisory committees in the following industries: securities, banking and insurance. The proposals seek to establish a more defined framework “for the activities of the Committees” and envision that “[e]nhanced supervisory convergence and cooperation will contribute to the stability of financial markets.” The EC proposals also included a measure to provide “financial support from the EU budget” to state supervisory committees and three pan-European bodies that are involved in the standard-setting process for financial reporting and auditing: the International Accounting Standards Committee, the European Financial Reporting Advisory Group and the Public Interest Oversight Body.