EIOPA has published a report, dated 25 May 2012, on the role of insurance guarantee schemes (IGSs) in the winding-up procedures of insolvent insurers in the EEA. This report was prepared as part of EIOPA’s input to the European Commission’s policymaking on IGSs.
An IGS provides last-resort protection to policyholders and beneficiaries when insurers are unable to fulfil their contractual obligations. EIOPA’s findings indicate that while nearly all EEA member states have some form of protection, comprehensive protection is scarce.
EIOPA highlighted that there is a lack of harmonisation between Member States in the area of IGSs. This gives rise to a lack of consistency in a number of areas, including:
- Which authority (i.e. supervisory authority or court) is responsible for deciding when to intervene if an insurer becomes insolvent
- Whether or not IGSs can be involved in portfolio transfers
- Whether or not IGSs are given advance warning that an insurer might be in difficulty
- The role an IGS plays when an insurer becomes insolvent
EIOPA’s report shows how EEA member states have exercised their discretion in implementing the Insurance Winding-Up Directive to correspond with their own legal and institutional frameworks. In the event of a cross-border insolvency, this report could help to identify some important issues at an early stage.
A draft Directive for IGSs is expected in 2013.
Contributed by: Niall Campbell
