EIOPA and World Bank promote global industry
The European Insurance and Occupational Pensions Authority (EIOPA) has signed an operational Memorandum of Understanding (MoU) with the World Bank agreeing to collaborate on the development of the worldwide insurance sector.
Spokespeople from World Bank and EIOPA discussed the new MoU with Bermuda:Re.
What led to this Memorandum of Understanding with EIOPA? How will a relationship with World Bank help EIOPA’s cause?
Given the globalisation of financial services and the increased importance of international standards, an important role of EIOPA according to its Regulation is to foster dialogue and cooperation with international organisations and supervisors outside the Union.
In this regard, besides the numerous dialogues with third countries supervisory authorities and our work as a Member in the IAIS on standard setting, we also have been in contact with the World Bank to share information and expertise on risk-based supervision, consumer protection and financial stability. All these EIOPA activities need to be seen in the context of EIOPA’s role in the international arena to develop contacts and enter into administrative arrangements, amongst others, with international organisations.
As a tangible result of these contacts, we have now set up an operational MoU between EIOPA and the World Bank, which can be seen as a milestone as it is the first MoU of this kind for both organisations in the field of insurance.
What makes World Bank an attractive partner for EIOPA?
The World Bank offers technical support and advisory services to assist emerging markets and developing countries in the process of moving to a more risk-based supervision that focuses on upgrading insurance regulation and supervision, including solvency modernization. They are implementing their programmes already in countries like Argentina and Turkey, which are of importance from a European insurance market perspective. Furthermore, we see benefit of collaborative activities in EU (potential) candidate countries, in which the World Bank is already active for decades.
The World Bank can make use of the extensive knowledge we have built up on a wide range of insurance issues, whereas we can benefit from amongst others the extensive network of the World Bank in emerging markets as well as their work on market research and trend developments.
Do you have any specific goals in mind for this partnership? Will it bring a larger number of countries in line with EIOPA’s ideals?
The aim of this MoU is to establish an operational cooperation and to carry out collaborative activities, such as participation in seminars, providing speakers for events as well as exchange of knowledge, non-confidential technical papers and best practices. By combining our expertise and knowledge of best practices and by working jointly on areas of common interest, we strongly believe that we will contribute to the objectives of the partnership, which are to:
- Contribute to the process of promoting a more risk-based regulatory and supervisory framework
- Foster efficient and effective supervision;
- Promote consumer protection, financial literacy and education initiatives by competent authorities; and
- Contribute to financial stability and identification of systemic risk.
These objectives are also key to the work of EIOPA and have a sound foundation in EIOPA’s Regulation.
Does this partnership have the potential to encourage insurance take-up in countries where the industry is less developed?
Across emerging markets, many regulators seek to reform the regulatory and supervisory framework for the insurance market and move progressively towards risk-based supervision of the industry. By contributing to the World Bank programmes in these countries, we will strengthen the insurance sector and promote confidence in its stability, which will eventually encourage the take-up of businesses.
How will the insurance industry benefit from a global approach?
Sound risk management, appropriate group supervision and a risk-based regulatory/supervisory framework including capital requirements on a global level would provide the insurance industry with a level playing field and help avoid administrative burden and costs caused by different regulatory requirements.
In the end, the policyholders/consumers would benefit most as their protection would be ensured worldwide in a similar manner. However, this MoU with the World Bank is an operational MoU aiming to carry out collaborative activities such as participation in seminars, providing speakers for events as well as exchange of knowledge, non-confidential technical papers and best practices.
The IAIS, in addition to its Insurance Core Principles related responsibilities, currently pursues two key global initiatives: ComFrame, the Common Framework for the Supervision of Internationally Active Insurance Groups and – as a request by the Financial Stability Board – the identification and supervisory treatment of g-SIIs, the global systemically important insurers. EIOPA is actively contributing to both and is an IAIS Member since 2011