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EIOPA Publishes FAQ On Upcoming Insurance Recovery And Resolution Directive – Insurance Laws and Products

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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 -
2022

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.

POPULAR ARTICLES ON: Insurance from Ireland

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