CEA responds to EC consultation on financial services supervision

The CEA, the European insurance and reinsurance federation, has submitted its response to the European Commission's consultation on the future of financial services supervision in the EU, which followed the report published by the European Commission's High Level Group on Financial Supervision, chaired by Jacques de Larosière, and the EC's Communication "Driving European Recovery".

The CEA's response focuses primarily on prudential supervision and fully supports more harmonised and consistent supervision at EU level. "That harmonisation of prudential supervision in insurance will be brought about by the new Solvency II regulatory regime, which addresses many of the shortcomings of the current EU regulatory framework for insurance," said Michaela Koller, CEA director general.

The CEA welcomes the De Larosière Group's recommendation to strengthen the role and powers of the three so-called "Level 3" committees, which represent the EU's insurance, banking and securities supervisors. In particular, it supports the setting up and strengthening of colleges of supervisors based on an appropriate prudential framework that reflects the economic reality of the cross-border groups that are under supervision.

"Cooperation between regulators is of the utmost importance," said Koller. The CEA also supports the transformation of the Level 3 committees into European authorities with new powers – as proposed by De Larosière in a second phase of reforms – provided their accountability and transparency is clear.

However, the CEA does not support the merger of the European banking and insurance authorities. Different financial services sectors have different requirements, and the CEA reiterates that the insurance model is fundamentally different from that of banking, as demonstrated by insurers' general withstanding of the economic crisis. Improved coordination and cooperation arrangements between authorities remain the best way to achieve cross-sectoral consistency.

Equally, the CEA remains unconvinced of the feasibility of the proposal to create an EU-wide conduct of business authority due to significant differences in regulation and practice between EU member states.

CEA response

The CEA is the European insurance and reinsurance federation. Through its 33 member bodies, the national insurance associations, the CEA represents all types of insurance and reinsurance undertakings, eg pan-European companies, monoliners, mutuals and SMEs. The CEA, which is based in Brussels, represents undertakings that account for approximately 94% of total European premium income. Insurance makes a major contribution to Europe’s economic growth and development. European insurers generate premium income of EUR 1,122bn, employ one million people and invest more than EUR 7,200bn in the economy.