On 6 March, Insurance Europe issued a press release responding to EIOPA's consultation on the potential harmonisation of recovery and resolution frameworks for insurers. Insurance Europe argues that such a framework is unnecessary for the following reasons: Solvency II already provides sufficient safeguards for early intervention through the Minimum Capital Requirement (MCR) and Solvency Capital Requirement (SCR) regimes; even before Solvency II failures of insurers were rare; insurance business has proven to be resilient to business cycles with relatively few insurers failing as a result of the financial crisis; insurance failures, when they do happen, are contained in that they do not affect other insurers or the payment system; and as insurance liabilities are not callable on demand, like much banking business, insurers do not fail suddenly but can be wound down in a managed fashion.
However, Insurance Europe does believe that a certain degree of convergence of recovery and resolution practices would be beneficial. It recommends: that it be clarified that no Member State should have powers of intervention before there has been a breach of the SCR; `stay and suspension powers' which can prevent mass lapses should be extended across Europe; and cross-border cooperation and coordination between supervisory and/or resolution authorities should be reinforced, as well as the mutual recognition of resolution actions.
A link to the press release is here.