Member states of the European Union were required to implement Directive 2005/68/EC on Reinsurance (the Reinsurance Directive) by 10 December 2007. The Reinsurance Directive, which will directly affect pure reinsurers and the reinsurance business of mixed companies, is intended to establish a sound and prudent supervisory regime in the interests of policyholders across the member states.
The Reinsurance Directive introduces several measures that will have a material impact on UK and other member state reinsurers. For example, whilst responsibility for financial supervision for each reinsurer will rest with the home state, there will be a single passport regime enabling a reinsurer authorised in any member state to carry on business in any country within the EU, on either a branch or services basis. There are provisions permitting the use of finite insurance and special purpose vehicles in accordance with the rules of the home member state. Finally, member states will not be allowed to require reinsurers to pledge assets to cover their part of the cedant's technical provisions.
Click here for more information about the aims and content of the Reinsurance Directive.