{"id":12207,"date":"2018-07-26T20:08:17","date_gmt":"2018-07-26T20:08:17","guid":{"rendered":"http:\/\/legalblog.ie\/insurance\/"},"modified":"2022-09-25T15:42:51","modified_gmt":"2022-09-25T15:42:51","slug":"insurance","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/insurance\/","title":{"rendered":"Insurance Business [EU]"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/insurance\/#Regulation\" title=\"Regulation\">Regulation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/insurance\/#EU_Cross-Border_Aspects\" title=\"EU Cross-Border Aspects\">EU Cross-Border Aspects<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/insurance\/#Groups\" title=\"Groups\">Groups<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/insurance\/#Reinsurance\" title=\"Reinsurance\">Reinsurance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/insurance\/#Winding_Up\" title=\"Winding Up\">Winding Up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/insurance\/#EU-US_Agreement_on_Insurance_and_Reinsurance\" title=\"EU-US Agreement on Insurance and Reinsurance\">EU-US Agreement on Insurance and Reinsurance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/insurance\/#Key_Points\" title=\"Key Points\">Key Points<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/insurance\/#Context\" title=\"Context\">Context<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/insurance\/#References\" title=\"References\">References<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Regulation\"><\/span>Regulation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The European Union has legislated in relation to insurance services.\u00a0 As part of the freedom of movement of capital and freedom to provide services, there is legislation setting down common principles of insurance regulation.<\/p>\n<p>An insurance company established and regulated in the state may provide services across borders or may establish itself in other EU states on the basis of regulation in the home country and consumer protection supervision in the host country.<\/p>\n<p>A 2009 Directive on insurance and reinsurance seeks to create a legal framework enabling insurance and reassurance undertakings to provide services to the EU. It regulates non-life insurance, life assurance and reinsurance undertakings. The Directive sets out rules relating to<\/p>\n<ul>\n<li>taking up of self-employed activities of direct insurance and reinsurance;<\/li>\n<li>supervision of insurance and reinsurance groups;<\/li>\n<li>the reorganisation and winding up of direct insurance undertakings.<\/li>\n<\/ul>\n<p>Insurance is divided into various classes under a common EU-wide classification.\u00a0 Companies are authorised for and in accordance with the classes.\u00a0 There are further specific directives and rules dealing with issues in respect of certain types of classes of insurance.<\/p>\n<p>Insurance undertakings are not authorised to pursue life and non-life insurance activities simultaneously. However, undertakings life pursuing insurance activities may obtain authorisation to carry out restricted nonlife insurance activities (accident and sickness).\u00a0 Conversely, undertakings authorised for accident and sickness risk may obtain authorisation to carry out life assurance business.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"EU_Cross-Border_Aspects\"><\/span>EU Cross-Border Aspects<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Each member state\u2019s regulatory body must ensure adequate supervision of the insurance businesses it regulates. \u00a0Adequate mechanisms must exist for the production of relevant information from each supervised insurer.<\/p>\n<p>An insurance company which proposes to establish a branch within another EU state or intends to carry out its business in that state under the cross-border freedom to provide services must notify its home state and provide it with necessary information. The home authority notifies the host authority.<\/p>\n<p>Insurers must appoint a representative in the member state through which services are provided responsible for collecting information and representing the insurer in relation to persons pursuing claims or seeking redress before the court or authorities.\u00a0 They may be required to verify the existence and validity of insurance cover.<\/p>\n<p>Insurance companies must meet criteria in relation to their legal form, possess minimum guaranteed funds and provide information required by the monitoring authority.\u00a0 In the case of certain failures of compliance, authorities in the home state must inform authorities in the host state.<\/p>\n<p>Agencies or branches established in the EU by head offices outside the EU may be authorised subject to meeting certain conditions.\u00a0 They must be authorised under national legislation and establish an agency or branch in the EU designating a general representative who must be approved by the regulator.<\/p>\n<p>The competent authorities of other EU states may be asked to assist in providing verification of matters. Competent authorities must be informed of intergroup transactions which have significance.. Measures must be taken if the requisite degree of solvency cannot be guaranteed.<\/p>\n<p>The regulators of the various states must work together and with the Commission in order to facilitate the monitoring of insurance companies.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Groups\"><\/span>Groups<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There are provisions to ensure that insurance companies within groups may be properly supervised on an individual basis. The Member States must require participating insurance and reinsurance undertakings to ensure the eligible own funds are available in the group, which are always at least equal to the group solvency capital requirement.<\/p>\n<p>States must provide the means of exercising control over groups. A single supervisor is to be designated from amongst the authorities of the states concerned. The risk supervisor is to be responsible for<\/p>\n<ul>\n<li>coordinating and gathering and dissemination of information,<\/li>\n<li>supervisory review and assessment of the financial situation of the group,<\/li>\n<li>assessment of compliance with the rules on solvency and on risk concentration and intergroup transaction;<\/li>\n<li>assessing the governance of the group.<\/li>\n<\/ul>\n<p>Each insurance group &#8211; a company with entities providing services in one or more European countries &#8211; must have a group supervisor that has specific responsibilities in close cooperation with the national supervisors involved.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Reinsurance\"><\/span>Reinsurance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There is a directive dealing with the taking up and provision of reinsurance businesses, whether life insurance or non-life insurance.\u00a0 Reinsurance activities must limit their activities to reinsurance and related business<\/p>\n<ul>\n<li>submit a scheme of operations<\/li>\n<li>posses a minimum guarantee fund<\/li>\n<li>be run by qualified persons of good repute<\/li>\n<\/ul>\n<p>There are provisions in relation to financial supervision and solvency technical provisions.\u00a0 These are the responsibility of the home state.\u00a0 There are provisions for the establishment of technical provisions, equalisation reserves and the investment of assets covering the provisions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Winding_Up\"><\/span>Winding Up<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There are specific rules in relation to the reorganisation and winding up of insurance businesses.\u00a0 The principle is that the winding up should take place in a single insolvency procedure initiated in the home state.\u00a0 They are then governed by a single insolvency law.<\/p>\n<p>The authorities of the home state are empowered to make the decision on winding up. \u00a0These must be recognised across the EU. Supervisory states of other countries must be informed of the opening of winding up proceedings as a matter of urgency.\u00a0 There must be appropriate publicity. The creditors must be individually informed and updated of proceedings.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"EU-US_Agreement_on_Insurance_and_Reinsurance\"><\/span>EU-US Agreement on Insurance and Reinsurance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bilateral agreement between the EU and the United States on prudential measures regarding insurance and reinsurance<\/p>\n<p>Decision (EU) 2017\/1792 \u2014 signing, on behalf of the EU, and provisional application of the bilateral agreement between the EU and the United States on prudential measures regarding insurance and reinsurance<\/p>\n<p>Decision (EU) 2018\/539 \u2014 conclusion of the bilateral agreement between the EU and the United States on prudential measures regarding insurance and reinsurance<\/p>\n<p>The agreement aims to:<br \/>\nstrengthen regulatory certainty and ensure a level playing field for insurers and reinsurers* operating in the EU and the United States;<br \/>\nimprove protection for policyholders and other consumers;<br \/>\npromote cooperation and exchange of confidential information between supervisors on both sides of the Atlantic.<br \/>\nCouncil Decision (EU) 2017\/1792 approves the EU\u2019s signature to the bilateral agreement. Council Decision (EU) 2018\/539 approves the agreement itself.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Points\"><\/span>Key Points<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The agreement:<\/p>\n<p>eliminates the imposition of any local presence, collateral* or similar requirements on a company (\u2018assuming reinsurer\u2019) which is not based in the same jurisdiction as the original insurer (\u2018ceding insurer\u2019);<br \/>\nspecifies that to benefit from equal treatment, an assuming reinsurer must comply with certain financial and market conduct conditions, such as<br \/>\nhaving at least \u20ac226 million where the ceding insurer is based in the EU or $250 million if they are domiciled in the United States;<br \/>\nmaintaining a certain solvency ratio;<br \/>\nproviding documentation to the host country\u2019s authorities when requested; and<br \/>\npaying promptly any claims under the insurance agreement;<br \/>\nsets out the procedure the host authority must follow if it wishes to impose any conditions because it considers an assuming reinsurer no longer meets all the listed requirements;<br \/>\nconfirms that supervision of a reinsurance company rests with the authorities in the jurisdiction where the parent is based, although host authorities may become involved in certain circumstances;<br \/>\nencourages supervisory authorities in the EU and the United States to exchange information while respecting confidentiality \u2014 an annex details how to conduct the exchanges;<br \/>\nestablishes a joint committee of EU and US representatives to meet regularly and oversee the implementation of the agreement;<br \/>\nallows either party, after consulting the other, to terminate the agreement provided certain procedures are followed.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Context\"><\/span>Context<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The agreement entered into force on 4 April 2018, although it had already applied provisionally since 7 November 2017.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"References\"><\/span>References<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Insurance companies often take out reinsurance to reduce their risk, especially when facing possible major environmental or other disasters. The reinsurer, in exchange for a premium, pays a share of any claims against the original insurer.<\/p>\n<p>The EU and the United States are major trading partners in reinsurance services. However, state insurance laws in the United States required non-US reinsurers, except those based in France, Germany, Ireland and the United Kingdom, to post 100% collateral for the risks involved \u2014 a significant deterrent for many companies in the EU.<br \/>\nEU insurance harmonisation through the Solvency II directive (Directive 2009\/138\/EC \u2014 see summary) opened the way in 2015 for insurance and reinsurance negotiations with the United States. These were completed in January 2017.<br \/>\nFor more information, see:<\/p>\n<p>EU-US insurance agreement concluded \u2014 press release (Council of the European Union).Reinsurer: a company that provides financial protection to insurance companies.<br \/>\nCollateral: assets such as cash and credit letters.<\/p>\n<p>Bilateral agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance (OJ L 258, 6.10.2017, pp. 4-21)<\/p>\n<p>Council Decision (EU) 2017\/1792 of 29 May 2017 on the signing, on behalf of the Union, and provisional application of the bilateral agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance (OJ L 258, 6.10.2017, pp. 1-2)<\/p>\n<p>Successive amendments to Decision (EU) 2017\/1792 have been incorporated into the original text. This consolidated version is of documentary value only.<\/p>\n<p>Council Decision (EU) 2018\/539 of 20 March 2018 on the conclusion of the bilateral agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance (OJ L 90, 6.4.2018, pp. 36-37)<\/p>\n<p>Notice concerning the entry into force of the bilateral agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance (OJ L 91, 9.4.2018, p. 1)<\/p>\n<p>Notice concerning the provisional application of the bilateral agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance (OJ L 288, 7.11.2017, p. 1)EIOPA<\/p>\n<p>The establishment of the EIOPA the EU\\&#8217;s regulatory authority for insurance has changed the supervisory regime. It has the function of encouraging cooperative competition within the sector exercising prudential oversight over and combating systematic risks within the market.<\/p>\n<p>The omnibus directive sets out circumstances in which EIOPA may mediate in a dispute between home and how state regulators.<\/p>\n<p>The EIOPA has significant rule-making powers including powers to propose binding technical standards technical regulatory standards for harmonisation of EU regulation and implementation technical standards.\u00a0It can make binding recommendations to national supervisory authorities and take enforcement actions in certain circumstances.<\/p>\n<p>&nbsp;<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-12207\" data-postid=\"12207\" class=\"themify_builder_content themify_builder_content-12207 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->","protected":false},"excerpt":{"rendered":"<p>Regulation The European Union has legislated in relation to insurance services.\u00a0 As part of the freedom of movement of capital and freedom to provide services, there is legislation setting down common principles of insurance regulation. An insurance company established and regulated in the state may provide services across borders or may establish itself in other [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[128,131],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12207"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12207"}],"version-history":[{"count":4,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12207\/revisions"}],"predecessor-version":[{"id":18687,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12207\/revisions\/18687"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}