The European Insurance and Pensions Authority (EIOPA) published today a follow-up report to the 2018 peer review on the supervisory practices for the application of proportionality principle in government requirements regarding key functions. The follow-up report assesses how national competent authorities (NCAs) have implemented the recommended actions from the original peer review.
EIOPA has found that the supervision of key function holders has improved during the last two years; however, in a small number of countries the development of supervisory practices are still in progress. Twelve NCAs have fully implemented the recommended actions addressed to them, whereas six NCAs have only partially implemented them.
The 2018 peer review also identified best practices in strengthening the supervision of key functions. Most of these best practices have been taken up by NCAs, fostering a coherent and consistent application of supervisory guidance. For example:
- The majority of NCAs have adopted a structured proportionate supervisory approach including the introduction of a supervisory documentation tool and consistent data submission for key function holders;
- Most NCAs have taken actions to ensure both high-quality supervision for governance issues and the application of the principle of proportionality in a coherent way;
- Some supervisory measures – in particular the assessment of whether administrative, management or supervisory body (AMSB) members challenge the key function holder who are also an AMSB member – tend to be applied on a case-by-case approach, especially towards high-risk undertakings;
- Most NCAs meet key function holders on a regular basis as part of their annual supervisory review plan.
EIOPA invites NCAs that have not yet fully implemented the recommended actions to consider the identified examples as inspiration for the development of their national supervisory practices. EIOPA will continue to closely monitor the implementation of recommended actions. EIOPA will also consider how best practices can be included in EIOPA’s supervisory handbook to foster convergence in the application of the principle of proportionality.
Background information on peer reviews and their follow-up reports
The role of peer reviews is to assess the application of existing practices by the national supervisory authorities, such as the implementation of directives, regulations, technical standards, EIOPA guidelines and recommendations, or supervisory practices. Peer reviews should also stimulate dialogue within and between supervisory authorities and facilitate sharing of best practices.
EIOPA undertakes pursuant Article 30(6) of the EIOPA Regulation a follow-up report two years after the publication of the peer review report. The follow-up report includes an assessment of the adequacy and effectiveness of the actions undertaken by the competent authorities that are subject to the peer review in response to the follow-up measures of the peer review report. EIOPA’s objective is to achieve consistent supervisory practices with the ultimate goal to protect policyholders.
EIOPA conducts peer reviews in accordance with Article 30 of EIOPA regulation. See the current two-year peer review work plan.