Recently, during the summer holidays, EIOPA disclosed public versions of two previously confidential chapters of the Solvency II (SII) part of its existing Supervisory Handbook. It concerns a chapter on the supervision of climate change risks in the context of SII Pillar II requirements and a chapter on the supervision of intra-group transactions and risk concentrations, both initially adopted by EIOPA early 2022. Continue reading…

On 14 March 2024, the European Commission decided to extend the provisional equivalence decision regarding the insurance and reinsurance solvency regime in force in the US. The regime applicable to insurance and reinsurance undertakings with head offices in the US is to be considered provisionally equivalent to the solvency rules related to the valuation of assets and liabilities, technical provisions, own funds, SCR, MCR and investment rules as laid down in Solvency II (SII). “EU insurance groups will be able to calculate capital requirements for their operations in the US on the basis of local rules. By eliminating the need to reconcile with EU rules, European groups can continue to operate on an equal footing with their American counterparts, and to benefit from alleviated administrative burden and reduced costs”, thus the Commission. Continue reading…

The Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland signed an agreement on mutual recognition in financial services, also called the Berne Financial Services Agreement, on 21 December 2023. It has several sectoral annexes, each dealing with the details for a particular financial sector. Annex 4 deals with insurance. The purpose of the Agreement, the mutual recognition, is reiterated in the annex: “Covered Financial Services Suppliers are permitted to provide Covered Services to Covered Clients from the territory of one Party into the territory of the other Party, as set out and specified in the Sectoral Annexes”. The covered services for both Parties in the insurance field are not entirely the same. Continue reading…

After more than 2 years of negotiating, just a few days before Christmas, on 21 December 2023, Karin Keller-Sutter, the head of the Swiss Federal Department of Finance, and Jeremy Hunt, the UK Chancellor of the Exchequer, signed the Agreement between the Swiss Confederation and the United Kingdom of Great Britain and Northern Ireland on Mutual Recognition in Financial Services, also called the Berne Financial Services Agreement. According to both parties, the Agreement is unique in the world in the area of financial services in terms of scope – encompassing a broad range of financial services sectors – and also in terms of approach: a two-way, and not a one-way, equivalence recognition. It sends a strong signal for open and resilient financial markets, according to the Parties. The Agreement was borne out of a desire of both countries to establish a framework for mutual recognition of each other’s regulatory and supervisory frameworks applicable to certain financial services, while taking account of their respective constitutional, legal and regulatory systems. Parties want to achieve this (1) through the removal of obstacles to the provision of financial services and the reduction of regulatory frictions for cross-border activity, based on and safeguarded by mutual recognition as well as (2) close regulatory and supervisory cooperation. Continue reading…

In less than a week, the Belgian treasury managed to raise a total of 21.896 billion euro from retail investors and savers for a hardly announced government bond, four times its target. It was the talk of the town, and a success nobody had imagined. It will go down in history as the largest capital operations of the Belgian government among its citizens. Belgium was not the only country in the EU which recently went directly to its citizens: also Italy, Portugal and Greece have done so. But why was the Belgian issuance such a roaring success ? Continue reading…

The Economic and Monetary Affairs Committee of the European Parliament agreed on 18 July 2023 the Ferber reports on the Solvency II review. The Ferber reports took nearly two years of gestation, but were finally adopted, with a larger majority for the Solvency II amendments than for the proposal for an Insurance Recovery and Resolution directive (IRRD). The report on the Solvency II amendments was adopted with 55 in favour, 3 against and 1 abstention, the report on IRRD was adopted with 44 in favour, 7 against and 8 abstentions. The reports are now tabled in the next European Parliament’s plenary for announcement on the ECON vote and on the mandate to enter into interinstitutional negotiations.  Thereafter, the Spanish presidency, the Commission and the European Parliament can start the trilogue. Will this go smoothly? It depends. Continue reading…

Recently, on 20 April 2023, the European Court of Justice delivered a judgment in the area of unfair terms in consumer contracts, in casu a group insurance contract. A month later the Commission proposed its Retail Investment Strategy (RIS). Case C-263/22 merits attention, not only because it highlights the obligations of group policyholders but also because the RIS contains provisions which streamline the pre- and post-contractual disclosures. The Portuguese supreme court asked for a preliminary ruling on a case brought before them between a Portuguese life insurer, Ocidental-Companhia Portuguesa de Seguros de Vida SA (“Ocidental”) and a retail consumer, LP. The case concerned the refusal by Ocidental to make loan repayments following the permanent invalidity of LP. LP and her spouse entered into a loan agreement with Banco de Investimento Imobiliário SA (“the bank”) and by doing so, they became party to a group insurance contract (“the insurance contract”), agreed between the bank and Ocidental. LP was the insured person. The insurance contract was a payment protection insurance contract, under which Ocidental would be required to make the loan repayments in the event of LP’s permanent incapacity. The policyholder was the bank. The reason was the alleged nullity or inapplicability of the insurance contract between Ocidental and the bank to which LP became a party. Continue reading…

In 2021, the EFTA Court delivered an interesting judgment. Maybe it passed unnoticed as COVID was still raging through our normal working habits. But in the context of the current Solvency II (SII) review, including the proposed new Insurance Recovery and Resolution directive (hereafter IRRD), it might be useful to read this case again. The case concerned two French non-life insurance undertakings who sought to hold the Liechtenstein Financial Supervisory Authority (FMA) liable for failing to fulfil its supervisory obligations towards a Liechtenstein insurer who became insolvent, and who was in three capacities a creditor to the French insurers. The claimants were thus not insured persons under an insurance contract or a policyholder of the Liechtenstein insurer. Continue reading…

In September 2017, the European Union and the US (US Treasury Department) announced that they had signed a Covered Agreement, formally titled Bilateral Agreement Between the United States of America and the European Union On Prudential Measures Regarding Insurance and Reinsurance (Agreement)[1*], on which negotiations had begun several years earlier. For the US, the Agreement requires States to eliminate reinsurance collateral within 5 years or risk preemption, i.e., federal law would displace, or preempt state law, due to the Supremacy Clause of the US Constitution. Without the Agreement, reinsurance companies that are not licensed in the U.S. must post 100% collateral to secure the transaction, unless they are a Certified Reinsurer or a Reciprocal Jurisdiction Reinsurer. If not licensed or approved to accept reinsurance, they are an Unauthorised Reinsurer. Companies that have a head office or are domiciled in Reciprocal Jurisdictions can become Reciprocal Jurisdiction Reinsurers if they meet the standards in certain model laws, in which case these companies are not required to post collateral. Continue reading…

European legislation, in which the European Parliament and the Council are co-legislators, has one problem: how to understand the full genesis of the rules, so important for law and other practitioners to understand the ratio legis? In the European Parliament, the Committee deliberations are public and web-streamed, and the same is true for the plenary meetings, where, in addition, the deliberations are written down in minutes. While the disclosure is not absolute on the side of the EP, on the side of the Council the situation is different. Documents exchanged in the working groups preparing the compromise in the Council are not disclosed and only the final text of the deliberations finds its way to the outside by way of the presidency’s general approach. Requests for access to documents are often denied or heavy censured text is released. Continue reading…