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CEA welcomes EC Communication on supervisory architecture

27 May 2009
by eub2 -- last modified 27 May 2009

The CEA, the European insurance and reinsurance federation, welcomes the publication today of the European Commission’s Communication in which it sets out its proposals for a new EU financial supervisory architecture.


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The Communication follows the report published in February by the EC’s High Level Group on Financial Supervision, chaired by Jacques de Larosière, and the EC’s Communication “Driving European Recovery”, which was published in March.

“The European insurance industry very much welcomes the EC proposals for an improved EU system of financial supervision,” said the CEA’s director general, Michaela Koller. “The insurance industry is convinced that supervisory cooperation and convergence is an appropriate answer to the current crisis.”

The CEA strongly supports the EC’s proposal for the transformation of the three Level 3 committees that represent the EU’s insurance, banking and securities supervisors into European authorities with the ability to make a selected number of binding decisions and with a mediation role.

The CEA believes that it is vital that separate European authorities are maintained for insurance, banking and securities supervision to ensure that the specific characteristics and business models of each are adequately recognised.

“The insurance business model is fundamentally different from that of banks,” stressed Koller. “A separate entity with specific expertise in and knowledge of insurance is therefore essential, and we very much welcome the EC’s proposal to keep the three authorities separate.”

The CEA also calls for greater representation of the insurance sector in the new supervisory body, the European Systemic Risk Council (ESRC), proposed by the EC. Although it would not have legally binding powers, the ESRC would identify risks to financial stability and issue risk warnings and recommendations for action.

Although the insurance sector is not a driver of systemic risk, representatives with the necessary expertise in insurance need to be included in the Council to achieve an adequate balance in the representation of the different financial sectors.

Background

The independent High Level Group on Financial Supervision (de Larosière Group) was set up by European Commission President José Manuel Barroso in 2008. Its mandate was to make recommendations to the Commission on strengthening European supervisory arrangements in all financial sectors, with the objective of establishing a more efficient, integrated and sustainable European system of supervision and of reinforcing cooperation between European supervisors and their international counterparts.

The Group reported on 25 February, and on 4 March the Commission published its Communication responding to the report. It then consulted on the future of financial services supervision in April and May, ahead of today’s Communication.

Should the Commission’s proposals be endorsed by the June European Council, the Commission will draw up concrete legislative proposals in the autumn for adoption during 2010.

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.

CEA - the European insurance and reinsurance federation