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EIOPA has published a helpful FAQ in a staff paper on the
upcoming Insurance Recovery and Resolution Directive
(IRRD). A few of the highlights:
- Resolution vs supervision – the
resolution authority should be separate from the supervisory
authority to avoid conflicts between the supervisory interests and
the resolution interests. However, the insurance resolution
function can be a separate part of the existing supervisory
authority, with a separate budget and reporting lines, not just an
additional task for the supervisor.
- Resolution vs liquidation – whether a
failing insurer is subject to resolution or ordinary liquidation
proceedings will be determined by the “public
interest” test. Where an insurer is failing or likely to
fail and there is no reasonable prospect of preventing failure, and
the resolution process is not in the public interest, the insurer
should be wound up through normal insolvency proceedings.
- Funding – the IRRD does not
set out how Member States are to fund resolution processes. In
Ireland, this could lead to additional levies on insurers.
EIOPA staff paper – Frequently asked questions about IRRD -
This article contains a general summary of developments and
is not a complete or definitive statement of the law. Specific
legal advice should be obtained where appropriate.
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