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Policy Brief

European insurance union and how to get there

What are the arguments for and against centralisation of insurance supervision? What would be the scope of a possible insurance union, and what would the legal basis be? How rapid should the move to insurance union be? This Policy Brief sets out to answer these questions.

By: Date: December 13, 2016 Topic: Finance & Financial Regulation

The issue

The full entry into force at the start of 2016 of the European Union’s Solvency II risk-based capital framework for insurance poses new challenges for supervisory cooperation in Europe. Supervisory challenges are present in terms of both management of systemic risk and day-to-day supervision. The common vulnerability of insurers to market risks, in particular the current low interest rate, is a source of systemic risk, and while supervisors might cooperate in day-to-day supervision, cooperation, such as exchange of information and coordinated action, can run less smoothly in times of crisis. Furthermore, risks are present in the context of a European insurance sector that is highly integrated, with a large and rising share of cross-border business.

The policy challenge

The European Insurance and Occupational Pensions Supervisory Authority (EIOPA) currently plays a coordinating role in supervision, with final authority remaining with the national supervisors. A more centralised role for EIOPA in a European insurance union would overcome the fragmentation in supervision and ensure a joined-up view of the large cross-border insurance groups, enhancing the effectiveness of supervision. However, a staggered approach can be followed in a move towards insurance union. In the first stage, EIOPA can be given the authority to foster supervisory convergence. Ultimately, EIOPA would be given direct powers to supervise significant insurance groups, within a network of national insurance supervisors.

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At this event the Group CEO of Generali, Philippe Donnet, will discuss the latest developments in the financial services industry with Guntram Wolff, Director of Bruegel. 

Speakers: Philippe Donnet and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 18, 2020
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In this week’s Director’s Cut of ‘The Sound of Economics’ podcast, Bruegel director Guntram Wolff talks with Nicolas Véron, senior fellow at Bruegel, about the implementation of a European Deposit Insurance Scheme (EDIS), one of the three pillars needed for the completion of banking union.

By: The Sound of Economics Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: April 3, 2018
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A ‘twin peaks’ vision for Europe

The organisation of the European Supervisory Authorities (ESAs) is based on a sectoral approach with one ESA for each sector, with separate authorities for banking, insurance and securities and markets. But is this sectoral approach still valid? This Policy Contribution outlines a long-term vision for the supervisory architecture in the European Union.

By: Dirk Schoenmaker and Nicolas Véron Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: November 13, 2017
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Healthcare reform has been a thorn in the side of the US administration for several months, prompting President Trump to declare that “Nobody knew that healthcare could be so complicated.” We review recent economists’ views on the issue.

By: Silvia Merler Topic: Global Economics & Governance Date: October 2, 2017
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Cross-border insurance in Europe

The cross-border insurance sector is becoming increasingly strong in Europe. This event looks at the current cooporation between national insurance supervisors and tries to define the role of the European Insurance and Occupational Pensions Authority.

Speakers: Gabriel Bernardino, Olav Jones and Dirk Schoenmaker Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 21, 2016