EIOPA has provided an Opinion addressed to national supervisory authorities on supervisory convergence in light of the UK’s withdrawal from the EU. EIOPA acknowledges that insurers may be seeking to relocate to or set up a new business in the EU in order to maintain access to the EU single market after Brexit.
EIOPA comments on the importance of the UK financial sector to the EU and assumes that the UK will become a third country (non-EU) for the purposes of applying the Solvency 2 framework after its withdrawal from the EU.
The Opinion considers the following principles:
- Authorisations and approvals – EIOPA wants member States to ensure that they have a sound authorisation process in place and have adequate resources to appropriately deal with the complexity of any new authorisation of the new undertakings.
- Governance and risk management – EIOPA expects the presence of the administrative, management or supervisory board members and key function holders in the Member State who dedicate sufficient time to fulfil their duties, as well as a level of local staff commensurate to the nature and amount of business being run from the entity.
- Outsourcing of critical and important activities – an extensive use of outsourcing of functions or activities by relocated and new entities cannot be allowed to deplete the corporate substance of the EU entities.
- On-going supervision.
- Monitoring by EIOPA.