In light of the current financial crisis, the CEA, the European Insurance and Reinsurance federation, has stressed the importance of reforming the regulation and supervision of the financial services industry. The CEA suggested that the crisis suffered within the financial markets has had a lesser impact on the insurance industry and, for that reason, most insurers do not require the same state assistance that has been provided to the banking industry. It also warned against over-regulation.
On 9 April 2009, the CEA, published its views on the de Larosière report and some of the issues within the European Commission's communication of 4 March 2009 (COM 2009 (114)) "Driving European Recovery". The response focuses on the recommendations and actions concerning prudential supervision and the insurance industry. The CEA welcomed the de Larosière report which it thought would help to restore confidence in the financial markets through harmonised supervisory powers at European level, crucially, with cooperation between regulators.
Some of the key responses are outlined below.
The CEA agreed with the de Larosière report which favoured Solvency II and suggested that it could bridge the gap in the current EU regulatory framework by providing "a harmonised risk-based and economic prudential regulatory regime". The CEA also welcomed the de Larosière report's endorsement of the group support regime and recognised it as a key part of Solvency II and therefore supported the re-consideration of it after the Directive has been in place for three years.
European System of Financial Supervision
The CEA also welcomed the de Larosière report's recommendation to strengthen the role and powers of the "Level 3" committees which represent the EU's insurance, banking and securities supervisors. It also called for increased funding and supported the setting up and strengthening of colleges of supervisors based on an appropriate prudential framework which reflects the economic reality of the cross-border groups that are under supervision.
The CEA supported the de Larosière proposal to transform the Level 3 committees into European authorities with new powers, providing that their accountability and transparency is clear. This would include the ability to make decisions that are legally binding, which the CEA believes would help to provide a more effective system of supervision.
The CEA does not, however, support the recommended merger of the European banking and insurance authorities for the reason that different financial services have different requirements. Instead, the CEA favour proposals that assist and encourage greater coordination and cooperation between authorities as a means of achieving greater consistency across the different sectors.
In addition the CEA was against the proposal to create an EU-wide conduct of business authority due to the vast differences in regulation and practice between the different EU member states. The conduct of business regulation should address the retail market and be tailored to the needs of consumers.