The European Insurance and Occupational Pensions Authority (EIOPA) has launched six consultations today, all related to the implementation of the European Union’s Insurance Recovery and Resolution Directive (IRRD). Today’s consultations propose draft guidelines and technical standards covering key aspects such as pre-emptive recovery plans, resolution plans and resolvability of insurance undertakings and groups.
The IRRD, which is set to become operational in 2027, introduces a recovery and resolution framework tailor-made for (re)insurers in Europe. The Directive puts the focus on the importance of pre-emptive planning and effective crisis management and aims at maintaining the stability of Europe’s insurance sector while also allowing for the orderly wind-down of failing undertakings and groups. The IRRD will make insurance failures less likely and limit the impact of failures when they do happen, making the management of insurance failures more effective and cost-efficient.
The consultations launched today concern crucial elements that will form the basis for the practical implementation of the IRRD. These include aspects such as pre-emptive recovery plans, resolution plans, resolvability assessment and the criteria to identify critical functions. In developing the instruments listed below, EIOPA sought to ensure proportionality and promote convergence while aiming to minimise the burden on both undertakings and authorities.
Content of pre-emptive recovery plans
The first consultation paper presents draft regulatory technical standards (RTS) that further specify the minimum elements that have to be included in the pre-emptive recovery plan of (re)insurers subject to pre-emptive recovery planning requirements.
Pre-emptive recovery plan criteria and methods to determine market shares
The second consultation paper concerns specific criteria for selecting which (re)insurers should be required to prepare pre-emptive recovery plans and details the methods for calculating the market share of undertakings subject to these requirements, ensuring that at least 60% of the respective market is covered.
Content of resolution plans
The third consultation paper sets out draft regulatory technical standards (RTS) that further specify the minimum elements that have to be included in the resolution plans.
Identification of critical functions
The fourth consultation paper specifies criteria for the identification of critical functions, the disruption of which could have a severe impact on policyholders, beneficiaries and the broader economy, including financial stability. The IRRD requires (re)insurers identified by resolution authorities as performing critical functions to draw up resolution plans.
Assessment of resolvability
The fifth consultation paper proposes Guidelines to further specify the criteria for the assessment of the resolvability of undertakings or groups, including the feasibility and credibility of their resolution strategy.
Addressing impediments to resolvability
The final consultation paper of this round relates to the alternative measures included in the Directive that resolution authorities may take to address or remove impediments to the resolvability of the insurance or reinsurance undertakings or groups in scope.
Background/Next steps
For more information on the IRRD – its objectives, key elements and the expected implementation timeline – visit the dedicated section of our website.