European ReguLATORY Update
European Coverholder Event: 3 November 2011
Alastair Evans, Head, Government Policy & Affairs
Contents
1. International regulatory context
2. EU current insurance issues
3. The lobbying environment
4. EU Insurance Mediation Directive
5. Conclusions
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1. MAY YOU LIVE IN INTERESTING TIMES
INTERNATIONAL reGULATORY CONTEXT

Significant number of far-reaching regulatory initiatives are under
debate internationally and nationally.

Many of these initiatives are a response to, or are influenced by, the
financial crisis.

Regulatory landscape has changed significantly recently and is likely
to change further in coming years.

Increased attention to ‘macro-prudential’ monitoring as well as change
at ‘micro-prudential’ level.
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INTERNATIONAL reGULATORY CONTEXT (CONT’D)
Proposals for change are emerging in various areas:

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
In the structures of financial services supervision.

A greater focus on systemic risk.

Closing of regulatory loopholes.

Intensified and more intrusive supervision and co-operation
between supervisors.

Heightened capital, reserving and risk management requirements.

Revisiting of corporate governance rules.

More focus on consumer protection.
EU Coverholders: 3 November 2011
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Chinese curses
2. MAY YOU come to the attention of
those in authority
INTERNATIONAL reGULATORY CONTEXT (CONT’D)

Changes to the UK financial services regulatory architecture.

Enactment of Dodd-Frank Act in US with the establishment of a
Federal Insurance Office.

IAIS work on systemic risk and Systemically Important Financial
Institutions (SIFIs).

IAIS Common Framework on Internationally Active Insurance Groups.

Changes in structure of other countries’ regulatory systems.
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EUROPEAN UNION

Establishment of European Systemic Risk Board and EIOPA.

Solvency II/Omnibus II: levels 1, 2 and 3

Third Country Equivalence

Insurance Guarantee Schemes

Gender Directive/Test Achats Case

Corporate Governance Rules

Consumer rights

IMD Review/MIFID

Environmental Liability
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The Lobbying Environment
Global
environment
G 20
EU
IMF
TAXUD
ECON
IMCO
European
Parliament
INTA
WB
JURI
TRADE
IFRIC
TREN
OECD
EMPL
European
Commission
ENTR
ENV
Economic & Social
Committee
AGRI
ENVI
ITRE
ARC
ECJ
European
Central Bank
IASB
MARKT SANCO
COMP
EMPL
WTO
UNEP
Council/
EU Presidency
CEA
IAA/EAG
EFRAG
CESR
EIOPC
IAIS
Joint
Forum
Insurance
mediation
Financial
stability
EFC
EIOPA
FSC
Insurance
groups
Solvency II
FSB
NCOIL
ESRB
Occupational
pensions
FCC
NAIC
IOPS
= central bodies
= representation of States
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‘You
have to be a genius to understand how the EU
makes law.’
Madeleine Albright, US Secretary of State
9 February 1998
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‘You
have to be a genius ‘or French’ to understand
how the EU makes law.’
Madeleine Albright, US Secretary of State
9 February 1998
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existing IMD

Contains regulations applying to EU insurance intermediaries.

Permitting them to operate in other Member States on an
establishment or freedom of services basis.

EU intermediaries must inform the competent authority of their home
Member State of their intention to transact cross-border trading in
other Member States, the home authority informs the host authority.


IMD allows Lloyd’s brokers to carry on services and establishment
business in and from other EU Member States and Lloyd’s
Coverholders to transact cross-border business.
The IMD was adopted in 2002 with a view to being transposed into
national legislation by 2005.
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IMD Review

CEIOPS advice to the Commission on revision of the IMD released in
November 2010, contained 39 recommendations.

Commission consultation paper in November 2010.

Public Hearing: December 2010.

Main issues raised: scope, policyholder protection, management of
conflicts of interest and transparency, increased efficiency in crossborder business and professional requirements.

Lloyd’s submitted a response to the Commission as well as
contributing to the CEA submission.

Commission proposal expected in February 2012.

Parallel MIFID and PRIPS debates: proposals to be released in
November 2011 and February 2012 respectively.
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Areas of debate

In its consultation, the Commission has identified that the review of the
IMD will focus on addressing the following objectives:

a high and consistent level of policyholder protection embodied in
the EU law;

effective management of conflicts of interest and transparency;

introducing clearer provisions on the scope of the IMD;

increased efficiency in cross-border business; and

achieve a higher level of professional requirements.
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Insurance intermediation
transparency protocol

Signed by BIPAR and FERMA in November 2010

Principles include:


Identification, management and mitigation of any potential conflict
of interest in an appropriate and transparent manner
Provision of clear information on the nature of intermediaries’
services and capacity in which they operate

Voluntary provision of information on the nature of remuneration
directly related to placing and servicing of the insurance contract

Disclosure of the amount of remuneration on request from the
client

Provision of generic information on other types of payments
intermediaries receive from insurers, if requested by the client.
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Conclusions

Regulatory environment is changing rapidly in Europe and
internationally, both in the regulatory architecture and substance of
rules.

Several important regulatory debates are underway.

Many present threats as well as opportunities.

EU insurance regulatory work is dominated by Solvency II but 2012 will
see emergence of further proposals in other areas including the
regulation of insurance intermediaries.

Lloyd’s is an active participant in all relevant regulatory debates.
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3. MAY YOU FIND WHAT YOU ARE LOOKING
FOR
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