Single market rules need to apply in insurance - Central Bank

Regulator says perception is that there is scope for different interpretations

While there is a single rule book for financial regulation in the EU, there is a perception that there is scope for different interpretations for some of the rules.

This has been seen in coverage of a "possible supervisory arbitrage" with member states competing to attract companies in the wake of Brexit, said Central Bank director of insurance supervision Sylvia Cronin.

She said that a single rule book needs to apply equally across the board.

After the financial crisis, the EU overhauled its financial system, introducing a single rule book for financial regulation. It created bodies which are pivotal in ensuring that financial markets across the EU are well regulated, strong and stable.

The insurance market saw its biggest regulatory overhaul ever taking place last year said Cronin speaking at speaking at PwC/ Insurance Ireland CEO breakfast briefing this morning.

It was implemented in 27 member states and the European Insurance and Occupational Pensions Authority (EIOPA) is responsible for ensuring effective and constistant levels of regulation and supervision taking into account of varying interests of member states.

This overhaul was called Solvency II and with it becoming business as usual, it is now important to look at supervisory convergence and transparency, said Ms Cronin.

In any single market, a key component is that the rules that govern the market apply equally to all the players irrespective of where they are based, Ms Cronin said. “This is as true for insurance as it is for food production or manufacturing,” she said.

Consumers then know that what they are buying is of the same standard irrespective of where it is produced. In relation to insurance, “it means that policyholders can be assured of a stable insurance market and their interests are protected,” said Cronin.

The Irish Central Bank was reviewed by the EIOPA and was one of six regulators who received an onsite visit from its peer review panel. They found that there is a “comprehensive, transparent authorisation process in place,” said Ms Cronin. The output of the review helped to develop a guidance on supervisory convergence in light of Brexit.