In my role as Chairperson of EIOPA, I would like to highlight some key areas of our work and how we can address future challenges.
Let me start with some facts.
Europe’s insurers manage assets worth more than EUR 10 trillion.
For life business alone, in Europe more than 97 million new contracts were written in 2021, bringing the total size of the life market to close to 660 million contracts, equalling EUR 578 billion in gross written premiums.
When it comes to pensions, there are more than 150,000 IORPs active in the EEA, with close to 60 million members and beneficiaries. These IORPs manage assets close to EUR 3 trillion.
These are big numbers, but also just numbers.
What do they mean in human terms?
They mean that insurance and pensions are fundamental for the wellbeing of individuals. They provide protection against foreseen – and unforeseen – events. They give peace of mind in a world of risks. They provide security in older age. They provide a means to channel the funds of millions of small savers into sustainable investments.
I want to underline the vital role that Europe’s insurance and pensions sectors play in the sustainability of our society and economy.
And the important role EIOPA plays. Through our knowledge, expertise and data, we ensure regulation and supervision works in society’s best interest.
Now, to the situation today.
Following Russia’s unprovoked invasion of Ukraine, we are witnessing a shift in the narrative. We are at an economic juncture driven by high inflation and uncertain economic growth.
While the impact on the insurance and occupational pensions sectors has been minimal, second-round effects are becoming increasing visible. Consumers are experiencing a cost of living crisis.
We are therefore closely monitoring the economic situation and the capital and liquidity position of EU insurers and IORPs, using all of our instruments to do so.
We are also continuing with other priorities, like closing protection gaps.
Over the past year, we have looked at insurers’ exposure to physical climate change risk, and climate change adaptation in non-life underwriting and pricing. We are carrying out behavioural research to better understand barriers to buying insurance, as well as continuing our work on our natural catastrophe dashboard.
Sustainability is also a key factor in pensions and we will soon release the results of our stress text of the European occupational pensions sector against a climate change scenario. Further, sustainability is one of the areas that we will address in the IORP II review.
Concerning digitalisation, many of the innovations we see will help to close some protection gaps, but only if there is appropriate supervision.
In the area of resilience, cyber insurance and the implementation of the Digital Operational Resilience Act, or DORA, remain priorities.
Fostering a common approach to supervision remains a core pillar of our work. To do this, we rely on effective supervisory tools, like cooperation platforms and our recent supervisory statements on exclusions.
In the area of consumer protection, let me highlight our recent warning concerning the sale of credit protection insurance products, often known as bancassurance. Having noted considerable issues, we are asking insurers and banks to address these or risk facing supervisory measures.
To meet future challenges, we should consider the importance of regulation, the limits of supervision, and the importance of good cooperation.
I have always said that when it comes to regulation, the foundations need to be right.
In the context of Solvency II review negotiations, EIOPA has continued to provide technical input and advice to the EU Institutions.
There will always be cases where insurers fail and we therefore welcome the Commission’s proposal for an Insurance Recovery and Resolution Directive. I also believe the issue of an Insurance Guarantee Scheme needs to remain on our agendas.
Regarding new regulation, we see an increasing tendency to horizontal or cross-sectoral regulation – like the AI Act.
In these cases, new legislation needs to consider existing regulation, the specificities of the sector and ensure consistency between existing frameworks.
Just as we need to review our regulatory frameworks, we should also review our supervisory toolkit.
This year, we adopted our first breach of Union law recommendation against a national competent authority for the incorrect application of Union law. This recommendation followed a lengthy process in which we exhausted all options available from our existing supervisory tools.
The case has been escalated to the Commission which adopted a formal opinion based on our recommendation. Nonetheless, it has taken too long to resolve this case and during this time we have not been able to take any direct action to protect policyholder interests. We should therefore consider how we update our supervisory framework.
The third point to be made is the need for good cooperation – a powerful tool in the face of any risk.
Here I would like to underline the good cooperation that we have with the European Commission and the European Parliament, in particular with you – the Members of the Economic and Monetary Affairs Committee.
A final word on our new strategy. It is an evolution designed to strengthen the resilience and sustainability of the insurance and pensions sectors, building on our strong foundation. Again, I would like to thank you for all the support that you have given us in the past and I look forward to a fruitful continued cooperation.
I am now ready to answer any questions.
- Publication date
- 24 October 2022
- European Insurance and Occupational Pensions Authority