Book InsuranceRegulationInTheEurope

Financial Regulation in the EU

Market regulation is related to business conduct, comprising both businessto-business and business-to-consumer relationships. We will review price regulation (Sect. 9.2.1) and explicit consumer protection (Sect. 9.2.2) before 1 The recent reference paper on insurance regulation in the Handbook of insurance (Klein 2014) uses different words to address the same issues: "(1) catastrophe risk, (2) competition and (3) systemic risk," with catastrophe being connected to solvency, competition to market and conduct and systemic risk being obvious. See also recital (16) of S2: "The main objective of insurance and reinsurance regulation and supervision is the adequate protection of policy holders (…) Financial stability and fair and stable markets are other objectives of insurance regulation." 200 P. Pradier and A. Chneiweiss turning to solvency, which can be understood as a particular form of consumer protection. 9.2.1 Price Regulations Back in the 1980s or early 1990s, insurance firms were in many continental European countries under close supervisory tutelage since EU member states could introduce "laws, regulations or administrative provisions concerning, in particular, approval of general and special policy conditions, of forms (…) of premiums…" (Dir. 1988/357/EC on non-life insurance art. 18, Dir. 1990/619/EC on life insurance art. 12). The 1992 Directives terminated this "interventionist era" and abolished prior approval of prices and forms (see especially art. 39 of Dir. 1992/49/EC on non-life and art. 29 of Dir. 1992/96/ EC on life insurance). By that time, 31 US states also had prior rate approval for automobile insurance (Harrington 2002 p. 292). The rationale for the EU's liberal move was the inefficiency of prior approval; as Harrington later brilliantly summed up: "There is little or no evidence that prior approval on average has a material effect on average rates for any given level of claim costs. This finding is consistent with an inability of rate regulation to reduce average rates materially and persistently in competitively structured markets without significantly reducing product quality or ultimately causing widespread exit by insurers" (Harrington 2002 pp. 310-311). In fact, some marginal price regulation remained, such as the compulsory "bonus" system in France (code des assurances A. 121); the basic idea behind it was to allow comparison of prices over time, a feature now rendered useless by Internet price comparison sites and on-demand contract termination (enabled by the recent 2014-344 law on consumption in France). The strongest point on pricing policy, though, was made by the European Court of Justice ruling of 1 March 2011 in the Test-Achats case (C-236/09), which gave insurers until 21 December 2012 to change their pricing policies in order to treat individual male and female customers equally in terms of insurance premiums and benefits. The scope of the ruling has since then been thought (Rego 2015) as encompassing all topics covered by Article 21 of the Charter of Fundamental Rights of the European Union (2000/C 364/01): "Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited." It is now uncertain whether place of residence will remain a valid basis for price discrimination after the EU

Zbornik radova Pravnog fakulteta Nis, 2019

The authors put forward the thesis that the European regulator's activity can be assessed in the context of the criteria of good regulation (in each of their dimensions). This is due in particular to the form and content of the legislative process in the European Union. They analyze the Directive (EU) 2016/97 (hereinafter: 'the Insurance Distribution Directive' or 'IDD') in the context of its quality per se, the legislative process and the intended objective of preventing misselling, while assessing its impact on economic freedom. The first objective of the paper is to discuss the hypothesis that 21st century is the time of transition from government to governance, which is connected with the postulate of the necessity of good governance in the European Union (hereinafter: 'EU') and in the Member States. The second objective of this paper is to discuss the analytical issues related with the very concept of good regulation in the EU and its impact on economic freedom. The next objective of this paper is to evaluate the selected legal act (IDD) in terms of criteria of Better Regulation for Better Results to show the practice dimension of European Insurance Law regulation.

The Geneva Papers on Risk and Insurance - Issues and Practice, 2006

The process of the European insurance companies' solvency reform has entered into an extremely active phase. The European Commission drafted a Framework to guide the process, which it amended over the summer of 2005. In parallel with the release of this Framework, the Commission launched three waves of consultations. To understand what is at stake with this reform, it is useful to begin by reviewing the reasons that led the Commission to initiate Solvency II in the first place, upon completion of Solvency I, and the conditions under which the process should be conducted. Then, we will turn to the principal orientations of the reform, with particular emphasis on six of them. Finally, we discuss seven of the most salient economic and financial issues at this point in the discussion. The fact that the Commission's work was not preceded by in-depth technical work, as was the case for the Basel Committee when it undertook banking solvency reform, gives us some idea of the magnitude of the task facing the Commission, which must not only invent new legislation better adapted to the realities of the European insurance industry, but also resolve a number of technical, economic and financial matters for which little or no consensus exists today.

Proceedings of the International Conference on Business Excellence, 2017

The new solvency regime Solvency II represents a solid and harmonized prudential framework applicable by insurance companies in the European area. Solvency II was implemented in the European Union by adopting Directives 2009/138/EC respectively 2014/51/EU, replacing existing directives regulating solvency former regime, known as Solvency I. Thus, the new European legislation in insurance, applicable from 1 January 2016, was aimed at unifying the main European insurance market and ensuring consumer protection. The responsible authority at EU level with the implementation of the new solvency regime is EIOPA - European Insurance and Occupational Pensions Authority, which dealt in previous periods of testing the European market insurance through organizing quantitative impact studies (last exercise - QIS5, organized in 2011). The main standards derived from Solvency II and also the new IFRS accounting provisions, intended to increase the transparency of risk management and investment, i...

2006

The changing global economy makes the European single market to be urgently reformed and adjusted to the new trends. It is of the special importance for the financial sectors determining a competitive development within the common structures. To respond successfully the Member States decided to reconstruct financial services in a way to make them much more flexible and better reacting towards the wider economic alterations. Therefore, the banking and insurance markets are undergoing revolutionary reforms in order to create a level playing field for the prudential supervisors and the companies by the same time fostering the integration processes within the EU.

The Geneva Papers on Risk and Insurance Theory, 1999

There have been major changes in the way European insurance markets are regulated, and there is still considerable debate about what the form and scope of regulation should be. This article examines the arguments for solvency regulation when consumers are fully informed of the insurer's insolvency risk. It is shown firms always provide enough capital to ensure solvency, unless there are restrictions on the composition of their asset portfolios. The conclusion holds even when competition means that only normal profits can be earned. This suggests that the role of regulation in insurance markets should be confined to providing consumers with information about the default risk of insurers.

Theoretical and Applied Economics, 2011

Abstract. The objective of this paper is to present a vision in the sphere of the problematic of assets and liabilities' evaluation that are reflected in the balance sheet of the insurance companies, inside the theory of the contingent claims, and of the marginal theory inside the insurance ...

The ICFAI Journal of Insurance Law, 2008

Scandic Journal Of Advanced Research And Reviews

To run a market smoothly, regulations are very important. These regulations worked as set of parameters for all business operators, managers and their key stakeholders of a specific domain to work under certain rules so that every business has equal opportunity to earn and expand their operations. In Europe since mid of 18th century several legislations were introduced to regulate the market to protect the rights of investors, business and their stakeholders and also to create a free and fair market for all. Insurance companies and their managers were facing a problem with dissymmetry of information which means that they either they do not share important information to each other or either the access to the information was a way costly for them. There was a need of monitoring the economic activities and setting certain requirements for licensing. Regulations, ethics and rules were being introduced since 1800s. after the mid of 20th century, a series of regulations were introduced t...

Huebner International Series on Risk, Insurance and Economic Security, 2007