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Challenges for the insurance industry facing the complex regulatory system

Challenges for the insurance industry facing the complex regulatory system. Aglika Sabeva, LL.M. International Affairs Comité Européen des Assurances (CEA). ARIA Conference St. Petersburg, 27-29 May 2005. Outline. Reminder on CEA The changing regulatory & supervisory environment

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Challenges for the insurance industry facing the complex regulatory system

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  1. Challenges for the insurance industry facing the complex regulatory system Aglika Sabeva, LL.M. International Affairs Comité Européen des Assurances (CEA) ARIA Conference St. Petersburg, 27-29 May 2005

  2. Outline • Reminder on CEA • The changing regulatory & supervisory environment • CEA’s current overall priorities • Better regulation for insurers

  3. CEA, the "pan-European" insurance federationRepresenting 32 national insurance & reinsurance associations 30 full members 25 EU Member States + 5 Other Markets Iceland Liechtenstein Norway Switzerland Turkey 2 associate members Bulgaria Croatia 2 observers Russia AISAM (mutual insurers)

  4. European Insurance in Figures 2004 Premium Breakdown per Class

  5. Share life and non-life premium in 2004: Two “Extreme” markets compared Latvia Breakdown per Class Finland Breakdown per Class

  6. Outline • Reminder on CEA • The changing regulatory & supervisory environment • CEA’s current overall priorities • Better regulation for insurers

  7. Number of insurance-related areas affected by EU legislation since 1990 (as of March 2005)

  8. Increasing number of procedures to follow • The newComitology (or Lamfalussy) procedure • Main principles designed by EU institutions (level 1) • Technical details dealt with: • - EIOPC: European Insurance and Occupational Pensions Committee (level 2) • - CEOIPS: Committee of European Insurance and Occupational Pensions Supervisors (level 3)

  9. The internationalisation of insurance regulation • Role of international organisations increasingly affects the European regulatory landscape • For example, two actors influencing the Solvency II debate: • IAIS - International Association of Insurance Supervisors • IASB - International Accounting Standards Board

  10. After Before 40% European Commission 26,2% EU Council 22.1% EP 1.8% Premium EU May 2004 EU enlargement: Relative weight of the ten new Member States (since 1/11/04)

  11. European insurance regulation: a chaotic building site? • Absence of central leadership • Staff changes within EU institutions • Many uncoordinated “sub”- sites • Industry consultation often unsatisfactory • Many options for Member States in implementation of directives • Implementation by Member States delayed

  12. Outline • Reminder on CEA • The changing regulatory & supervisory environment • CEA’s current overall priorities • Better regulation for insurers

  13. CEA’s current overall priority issues FinancialReporting Pensions Solvency II Taxation Guarantee Schemes Insurability of new risks Post FSAP

  14. Outline • Reminder on CEA • The changing regulatory & supervisory environment • CEA’s current overall priorities • Better regulation for insurers

  15. EU regulation impacts the value drivers of insurance business Premiumrevenues Cost of capital Operational costs EU regulations Investment income

  16. Premium income is influenced by a number of regulations to be implemented Environmental liability directive Feed hygiene regulation Premium Product liability project Occupational pensions directive Gender equality directive

  17. Consumer protection rules often increase costs for insurance operators Investment services directive Consumer credit directive Operational costs Distance marketing directive Insurance mediation directive E-commerce directive

  18. Insurance operators’ investments are also regulated by the EU 3rd non-life insurance directive UCITS directive Investment income Hedge funding (EP report) 3rd life insurance directive

  19. A number of ongoing projects have a potential impact on the cost of capital Solvency II directive IAS/IFRS project Cost of capital Reinsurance directive Transparency directive Guarantee schemes working paper

  20. Better regulation for insurers is needed to fulfil their role in society • A window of opportunity • the right message at the right moment and to the right person • adapt to new structures • enhance coordination of insurers’

  21. CEA Publications (1) Can be ordered from the CEA home page www.cea.assur.org Available for free on the CEA home page www.cea.assur.org

  22. CEA Publications (2) Available for free on the CEA home page www.cea.assur.org

  23. www.cea.assur.org

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