The Committee on Economic and Monetary Affairs (ECON) in the European Parliament today adopted by 44 votes in favour, (7 votes against and 8 abstentions) its position on the insurance recovery and resolution directive. Henrike Hahn, Member of the European Parliament (The Greens/EFA), substitute member of the ECON committee and shadow rapporteur for IRRD comments:
“The Commission's proposal for the new insurance recovery and resolution directive (IRRD) was a great opportunity to make the insurance sector and the European financial system significantly more stable. This opportunity was clearly missed with today’s vote.
The position of the European Parliament fails to impose planning requirements for recovery and resolution on a sufficient number of insurance companies and lets too many of them off the hook. In the case of insurance groups and financial conglomerates - companies that offer both insurance and banking services, there is no guarantee that the recovery and resolution plans actually cover all companies and activities within the group.
In the event of an impending insolvency, recovery and resolution measures only have to be initiated when it may already be too late for a recovery. Such regulatory gaps can cost taxpayers dearly.
It is a green success that the Parliament's position does define national rules on resolution financing - an aspect that was missing from the Commission's proposal. According to these rules, insurance companies have to provide financing at national level to be available in the event of a resolution.
However, today's decision leaves the door wide open for such resolution funds to be used before losses have been borne by the company itself. An important principle of company resolution is that losses must first be borne by the company itself before other means of financing can be used. With the IRRD, we want to support financial stability in Europe and not completely erase the insurers' responsibility for their competitiveness.
Therefore, I cannot support the final text.”
I would be happy to answer any further questions.