Question 25 August 2016 D Clune (Fine Gael-PPE)
Subject: Enterprise Insurance
Enterprise Insurance, a Gibraltar-based insurer providing services in Ireland within the single market, collapsed in July 2016 with outstanding debts.
In March 2016 I wrote to the Commission in light of the collapse of Setanta Insurance, which was operating under similar conditions and rules to Enterprise. The Commission’s response was that:
‘The Commission is not responsible for supervision of insurance companies and cannot comment on the specific situation of Setanta. However, on a general note, the Commission observes that a new regulatory framework for insurance companies, “Solvency II”, will apply as of 1 January 2016. The new rules strengthen the powers available to competent authorities and are intended to ensure that insurance companies will be stronger and more resistant. For example, the new rules allow supervisors to intervene promptly in case of capital short-falls, focus on insurers’ internal governance arrangements, risk evaluation and management processes and enhance the role of colleges of supervisors, making sure that information is shared between relevant authorities in case of cross-border activities’.
Given that another company has now failed, with the potential for Irish consumers to be responsible for the debts of this business, can the Commission please outline how the situation described in the answer above protects European consumers?
Answer 7 October 2016 Vice-President Dombrovskis (on behalf of the Commission)
Solvency II reduces the likelihood of insurance failures by reinforcing the solvency and other requirements on insurance companies in the EU, including those engaged in cross-border activities. It also clarifies the roles of home and host supervisors and facilitates cooperation between them.
The European Insurance and Occupational Pensions Authority (EIOPA) aims to improve cooperation between supervisors and supervisory standards throughout Europe, including via the following tools:
– a Supervisory Handbook, compiling good practices in different areas of Solvency II
– Balance sheet reviews of insurers in various Member States
– on-side visits by EIOPA’s Oversight team providing feedback to national supervisors
As part of the Capital Markets Union (CMU), the Commission puts emphasis on supervisory convergence and enhanced supervisory standards. EIOPA is revising its General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union in order to reflect the entry into force of Solvency II and to further improve supervisory cooperation and the exchange of information in cross-border cases.
The Commission is currently in the process of reviewing, under its REFIT programme[1], the Motor Insurance Directive, which regulates inter alia the role of motor insurance guarantee funds. The outcome of this review should be available in the course of 2017.
However, failure of insurers, including those with cross-border activity, cannot be completely prevented under any regulatory regime. Regarding insurers in difficulty, EIOPA is working on a report on possible EU-level recovery and resolution measures, including the subject of Insurance Guarantee Schemes, due to be completed early in 2017.
Enterprise Insurance, a Gibraltar-based insurer providing services in Ireland within the single market, collapsed in July 2016 with outstanding debts.
In March 2016 I wrote to the Commission in light of the collapse of Setanta Insurance, which was operating under similar conditions and rules to Enterprise. The Commission’s response was that:
‘The Commission is not responsible for supervision of insurance companies and cannot comment on the specific situation of Setanta. However, on a general note, the Commission observes that a new regulatory framework for insurance companies, “Solvency II”, will apply as of 1 January 2016. The new rules strengthen the powers available to competent authorities and are intended to ensure that insurance companies will be stronger and more resistant. For example, the new rules allow supervisors to intervene promptly in case of capital short-falls, focus on insurers’ internal governance arrangements, risk evaluation and management processes and enhance the role of colleges of supervisors, making sure that information is shared between relevant authorities in case of cross-border activities’.
Given that another company has now failed, with the potential for Irish consumers to be responsible for the debts of this business, can the Commission please outline how the situation described in the answer above protects European consumers?