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European ReguLATORY Update

European ReguLATORY Update. European Coverholder Event: 3 November 2011 Alastair Evans, Head, Government Policy & Affairs . Contents. International regulatory context EU current insurance issues The lobbying environment EU Insurance Mediation Directive Conclusions. Chinese curses.

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European ReguLATORY Update

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  1. European ReguLATORY Update European Coverholder Event: 3 November 2011 Alastair Evans, Head, Government Policy & Affairs

  2. Contents • International regulatory context • EU current insurance issues • The lobbying environment • EU Insurance Mediation Directive • Conclusions EU Coverholders: 3 November 2011

  3. Chinese curses 1. MAY YOU LIVE IN INTERESTING TIMES

  4. INTERNATIONAL reGULATORY CONTEXT • Significant number of far-reaching regulatory initiatives are under debate internationally and nationally. • Many of these initiatives are a response to, or are influenced by, the financial crisis. • Regulatory landscape has changed significantly recently and is likely to change further in coming years. • Increased attention to ‘macro-prudential’ monitoring as well as change at ‘micro-prudential’ level. EU Coverholders: 3 November 2011

  5. INTERNATIONAL reGULATORY CONTEXT (CONT’D) • Proposals for change are emerging in various areas: • In the structures of financial services supervision. • A greater focus on systemic risk. • Closing of regulatory loopholes. • Intensified and more intrusive supervision and co-operation between supervisors. • Heightened capital, reserving and risk management requirements. • Revisiting of corporate governance rules. • More focus on consumer protection. EU Coverholders: 3 November 2011

  6. Chinese curses 2. MAY YOU come to the attention of those in authority

  7. INTERNATIONAL reGULATORY CONTEXT (CONT’D) • Changes to the UK financial services regulatory architecture. • Enactment of Dodd-Frank Act in US with the establishment of a Federal Insurance Office. • IAIS work on systemic risk and Systemically Important Financial Institutions (SIFIs). • IAIS Common Framework on Internationally Active Insurance Groups. • Changes in structure of other countries’ regulatory systems. EU Coverholders: 3 November 2011

  8. EUROPEAN UNION • Establishment of European Systemic Risk Board and EIOPA. • Solvency II/Omnibus II: levels 1, 2 and 3 • Third Country Equivalence • Insurance Guarantee Schemes • Gender Directive/Test Achats Case • Corporate Governance Rules • Consumer rights • IMD Review/MIFID • Environmental Liability EU Coverholders: 3 November 2011

  9. The Lobbying Environment Global environment G 20 WTO EU IMF SANCO MARKT OECD EMPL TAXUD European Commission ENV COMP ECON EMPL Economic & Social Committee IMCO AGRI TRADE European Parliament TREN ENTR INTA WB ENVI JURI ITRE UNEP ARC Council/ EU Presidency European Central Bank ECJ CEA IASB IAA/EAG IFRIC EFRAG CESR EFC EIOPC ESRB NCOIL Occupational pensions IAIS Insurance mediation FSC Insurance groups EIOPA Financial stability FCC Joint Forum NAIC Solvency II FSB IOPS = central bodies = representation of States EU Coverholders: 3 November 2011

  10. ‘You have to be a genius to understand how the EU makes law.’ Madeleine Albright, US Secretary of State 9 February 1998 EU Coverholders: 3 November 2011

  11. ‘You have to be a genius ‘or French’ to understand how the EU makes law.’ Madeleine Albright, US Secretary of State 9 February 1998 EU Coverholders: 3 November 2011

  12. existing IMD • Contains regulations applying to EU insurance intermediaries. • Permitting them to operate in other Member States on an establishment or freedom of services basis. • EU intermediaries must inform the competent authority of their home Member State of their intention to transact cross-border trading in other Member States, the home authority informs the host authority. • IMD allows Lloyd’s brokers to carry on services and establishment business in and from other EU Member States and Lloyd’s Coverholders to transact cross-border business. • The IMD was adopted in 2002 with a view to being transposed into national legislation by 2005. EU Coverholders: 3 November 2011

  13. IMD Review • CEIOPS advice to the Commission on revision of the IMD released in November 2010, contained 39 recommendations. • Commission consultation paper in November 2010. • Public Hearing: December 2010. • Main issues raised: scope, policyholder protection, management of conflicts of interest and transparency, increased efficiency in cross-border business and professional requirements. • Lloyd’s submitted a response to the Commission as well as contributing to the CEA submission. • Commission proposal expected in February 2012. • Parallel MIFID and PRIPS debates: proposals to be released in November 2011 and February 2012 respectively. EU Coverholders: 3 November 2011

  14. Areas of debate • In its consultation, the Commission has identified that the review of the IMD will focus on addressing the following objectives: • a high and consistent level of policyholder protection embodied in the EU law; • effective management of conflicts of interest and transparency; • introducing clearer provisions on the scope of the IMD; • increased efficiency in cross-border business; and  • achieve a higher level of professional requirements. EU Coverholders: 3 November 2011

  15. Insurance intermediation transparency protocol • Signed by BIPAR and FERMA in November 2010 • Principles include: • Identification, management and mitigation of any potential conflict of interest in an appropriate and transparent manner • Provision of clear information on the nature of intermediaries’ services and capacity in which they operate • Voluntary provision of information on the nature of remuneration directly related to placing and servicing of the insurance contract • Disclosure of the amount of remuneration on request from the client • Provision of generic information on other types of payments intermediaries receive from insurers, if requested by the client. EU Coverholders: 3 November 2011

  16. Conclusions • Regulatory environment is changing rapidly in Europe and internationally, both in the regulatory architecture and substance of rules. • Several important regulatory debates are underway. • Many present threats as well as opportunities. • EU insurance regulatory work is dominated by Solvency II but 2012 will see emergence of further proposals in other areas including the regulation of insurance intermediaries. • Lloyd’s is an active participant in all relevant regulatory debates. EU Coverholders: 3 November 2011

  17. Chinese curses 3. MAY YOU FIND WHAT YOU ARE LOOKING FOR

  18. EU Coverholders: 3 November 2011

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