The Future of Insurance Supervision in the EU: National Authorities, Lead Supervisors or EU Supranational Institution?
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The Future of Insurance Supervision in the EU: National Authorities, Lead Supervisors or EU Supranational Institution? Jan Monkiewicz Politechnika Warszawska, Narbutta 85, PL-02524 Warsaw, Poland. E-mail: [email protected]
Financial markets require proper regulation and supervision. Their standards, architecture and mutual relations have to keep pace both with the current understanding of the core business as well as with market developments. The program put forward by FSAP and particularly by the Solvency II project revitalized among other things again the discussion on the future of EU insurance supervision. Should it remain – as of today – largely state based,or should it go into more or less different directions – a lead supervisor or some supranational agency? The article seeks to review major elements of the current debate and to stress the need for continuity in the possible future evolution of the EU supervisory systems. The Geneva Papers (2007) 32, 393–400. doi:10.1057/palgrave.gpp.2510133 Keywords: regulation and supervision; regulatory reform; legislation
Introductory remarks The growth of the EU financial markets, including insurance, its regulation and supervision over the last decades remains heavily influenced by the concept of the single financial market. This concept, covering as of today banking, insurance and reinsurance and the securities sectors is a unique and complex idea. It is worthwhile to recall that this concept is based on six core principles developed gradually in the period from 1973 to 1993. They include: 1. 2. 3. 4. 5. 6.
national jurisdiction of the member countries, freedom of establishment, freedom of services, minimum harmonization, single licence (passport), home country control.
According to the first principle, each member state bears the sole responsibility for the financial market-related regulations. There are so far practically no EUwide international regulations which directly impact on the regulatory system of the member states. Thus currently the single EU financial market is regulatory-wise an aggregate of 28 national jurisdictions. They include 25 EU member countries
The Geneva Papers on Risk and Insurance — Issues and Practice
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and three countries of the European Economic Area (Norway, Iceland and Liechtenstein) that acceded to the single market on a contractual and voluntary basis. According to the second principle, every financial institution is free to establish itself in an area of the single financial market and to carry out its operations from there. In the process of establishment the rule of national treatment is applied. It can also – according to the third principle – provide its transborder services directly to the customers without having any physical presence at the point of delivery. To make these principles work in a coordinated and effective manner three other core principles have been developed. Instrumental among them is principle number four – that of minimum harmonization. Its essence lies in the acceptance by the member countrie
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