Insurance Quarterly Legal And Regulatory Update
EIOPA Consultation: Risk mitigation techniques for OTC derivatives, CCPs and Trade Repositories
On 6 March 2012, EIOPA issued a consultation paper - "Draft Regulatory Technical Standards on risk mitigation techniques for OTC derivatives not cleared by a central counterparty under the Regulation on OTC derivatives, central counterparties and Trade Repositories" (the "Draft Technical Standards").
The Draft Technical Standards are being issued to clarify EIOPA's expectations regarding the internal complaints handling system of insurers. In addition, it provides guidance on the provision of information to consumers and procedures for responding to complaints, thereby ensuring the adequate protection of both policyholders and beneficiaries.
This consultation paper relates to the European Commission's legislative proposals overthe- counter (OTC) derivatives, central counterparties (CCPs) and trade repositories. EIOPA (together with EBA and ESMA) are seeking feedback from stakeholders in order to assist it in developing technical standards. This consultation period ends on 2 April 2012. Comments should be submitted online at www.esma.europa.eu.
EIOPA voices its concerns regarding the delays affecting Solvency II
EIOPA has published a letter it sent the European Commission outlining its concerns as to the delay in the implementation of Solvency II. In the letter (dated 31 January 2012), EIOPA suggests that a delay in the application of Solvency II will lead to the development of national solutions by supervisors and undertakings seeking to ready themselves for Solvency II. The letter also refers to the fact that EIOPA's timeline for the completion of consultation with stakeholders on standards and guidelines is becoming ever-tighter. Finally, EIOPA encourages the European Commission, the European Parliament and the Council of the European Union to work together in ensuring Solvency II is implemented, as scheduled, in 2014.
EIOPA publishes its Action Plan 2012 for the Colleges of Supervisors
On 13 February 2012, EIOPA published its Action Plan 2012 for the Colleges of Supervisors.
The document represents a follow up on substantial efforts already made by supervisors and EIOPA in preparing, organising and contributing to the colleges of supervisors during 2011.
The two key goals of the Action Plan 2012 are:
- the establishment of a work plan on the activities of the college for an insurance group's internal model application; and
- the establishment of a regular information exchange within colleges in accordance with EIOPA's guidelines
In addition, EIOPA has published its report on the Functioning of Colleges and the Accomplishments of the 2011 Action Plan.
The Action Plan and Report are available on the EIOPA website: eiopa.europa.eu.
EIOPA publishes overview on key consumer trends
On 13 February 2012, EIOPA published its "Initial Overview of Key Consumer Trends in the EU".
The issues raised in the overview may be summarised as follows:
- Consumer protection issues around payment protection insurance have been identified by some EIOPA Members as a key consumer trend, given the size of the market and the regulatory issues which arise from certain types of selling practices. The issues have led to tighter regulation in some Member States including enforcement action in certain cases;
- There has been increased interest in unit linked life insurance products. This has highlighted certain issues, however, as the underlying funds of such products can be complex and the associated risks and/or costs are not necessarily sufficiently transparent to consumers. Regulators are requiring increased cost and risk transparency in respect of such products; and
- There has been increased use of comparison websites by consumers. The overview highlights the fact that such websites often result in an over-reliance by consumers on the price of products rather than the underlying terms and conditions of such products. The overview also refers to the fact that there are often commercial links between a comparison website and an insurer, giving rise to a potential conflict of interest.
