Reinsurance regulation a mess

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has found variations in the way European countries regulate foreign reinsurers.

In its report Responses to the Questionnaire on the Regulatory Treatment of Third Country Reinsurance Undertakings and on Existing Equivalence Procedures, CEIOPS found:

• all permitted the establishment of a branch within their jurisdiction
• most apply stringent authorisation processes within their jurisdiction to the establishment of a branch
• writing of reinsurance business by third country reinsurers on a freedom to provide services basis is permissible in the majority of EEA Member States
• a slightly greater tendency to prohibit this activity or impose special requirements where branches in third countries or brokers/intermediaries are involved
• special supervisory requirements (where imposed) are diverse in nature
• a more permissive attitude is adopted by supervisory authorities in “own initiative” cases, where relevant activities are undertaken in the third country.
• the intensity of the host supervisory approach to intra-group reinsurance activity remains largely unaffected (is not reduced) by the supervisory approach of the home supervisor.
• more EEA member states restrict the ability of third country mixed insurers to write reinsurance business on a freedom to provide services basis than do so in respect of third country pure/professional reinsurers. But where business is permitted, most respondents seek to treat reinsurers and mixed insurers in largely the same way.
• there are different approaches to co-reinsurance applied by those respondents who have specific rules governing this area, though a narrow majority maintain a freedom to provide services approach.
• there was almost an equal number did/did not adopt a specific approach to SPV operations and where special requirements are imposed, these were diverse in nature, but that a reoccurring theme was the need for application to/approval of the relevant supervisory authority.
• a limited number (4-5), have existing practices to assess equivalence under the applicable directives
• where procedures do exist, although some common elements are inevitably present (information collation), the procedures are largely diverse in nature.