Brussels, 08/10/2008 (Agence Europe) - On Tuesday 7 October, the European Parliament economic and monetary affairs committee took the first step in the search for balance in the rules on supervision of pan-European, insurance groups (Allianz, Aviva, Axa, Generali) (see EUROPE 9756). In adopting the draft report by British Labour member Peter Skinner (by 22 votes to 7), they refined the way the member state supervisor of home supervisor will have to operate before taking a final decision, in the event of disagreement in the college of the home supervisor and the supervisors where the group's subsidiaries are based (host supervisors). The balance will not be easy to find because it affects national sovereignty: cross-border groups want rules that are compatible with increasingly integrated markets, countries with group subsidiaries fear dilution of their power within the future colleges when prudential action is needed to protect their nationals who have insurance policies with the group.
“We are trying to ensure that member states' supervisors work together,” Skinner told EUROPE on Wednesday 8 October. MEPs have backed the European Commission proposal for colleges of supervisors. Though the decisions to be taken will almost all be subject to compromises between supervisors, they agree that the home supervisor should have the last word. Nevertheless, they have refined the decision-making mechanism proposed by the Commission: a college of supervisors cannot take more than three months to come to a decision; if there is disagreement, the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) will be asked to give its opinion within two months; the group supervisor will then have a week to reach a decision which, if it fails to take account of the CEIOPS opinion, will have to be explained (the “comply or explain” principle). Skinner hoped that the Council would take account of what MEPs have come up with in order to bring on board the 14 member states which opposed the French Presidency's proposal discussed at the Ecofin Council on Tuesday. This will not be easy, as witnessed by the disappointment of Lithuanian Liberal MEP Margarita Starkevièiûtë after the vote.
MEPs also established the way to calculate the minimum capital requirement (MCR), below which an insurance company will not be allowed to operate, and the solvency capital requirement (SCR) that an insurance company must hold to provide for the various risks it faces. They say the MCR should be within the range of 25% to 45% of the SCR. “We followed the advice of the CEIOPS,” which recommended between 20% and 50%, Skinner said, certain that the solution arrived at by MEPs will have “the same effect” as the one proposed by CEIOPS. The European Insurance Committee welcomed the text approved by the Parliamentary committee on minimum capital requirements. It was pleased that MEPs had not set arbitrary limits to the way group support works, whereby the parent company undertakes in writing to support a subsidiary experiencing solvency problems. The press release from the organisation says nothing, however, on the supervision issue. (M.B./transl.rt)