EIOPA has published a staff paper in which it has welcomed the EU Commission’s proposal for an Insurance Recovery and Resolution Directive (IRRD). The IRRD is a comprehensive framework taking into account the insurance-specific features.
The paper sets out the main benefits of the proposed IRRD, which include:
- one single framework across the EU, which seeks to minimise the potential impact on policyholders and the stability of the system as a whole in case of insurance failure;
- preventive planning as a fundamental element of the framework with the underlying idea that crisis prevention is less expensive and more effective than crisis management;
- appointment of resolution authorities with specialised knowledge of the insurance undertaking and the resolution process;
- clear conditions for resolution and adequate safeguards in line with international standards;
- a broad range of proposed resolution tools providing authorities with flexibility to reach an optimal solution in any situation; and
- resolution colleges addressing the need for cooperation and coordination among authorities, which will ensure a successful resolution process, particularly in cross-border cases.
EIOPA is of the view that the main elements of the proposal should be kept during the negotiation process.