Financial Services: Commission calls on the Slovak insurance supervisor to take measures in order to ensure compliance with Union law

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The Commission has adopted a formal opinion requiring the Slovak insurance supervisory authority (Národná banka Slovenska, NBS) to fully comply with the EU prudential regime for insurance and reinsurance undertakings in the EU (Solvency II). This opinion follows the recommendation issued by the European Insurance and Occupational Pensions Authority (EIOPA) under Article 17 of the EIOPA Regulation concerning breach of Union law.

Under the breach of Union law procedure, EIOPA has gathered evidence that a Slovak insurance company, under the supervision of the NBS as home supervisor, has been non-compliant over the past years with Solvency II rules in relation to technical provisions, capital requirements, investments and system of governance. EIOPA investigated and concluded that the Slovak supervisor failed to take the necessary corrective measures to address the firm’s non-compliance. Therefore, EIOPA recommended NBS to take appropriate steps to ensure a structural and sustainable recovery of all infringements or, if appropriate or mandatory, withdraw the firm’s authorisation.

Pursuant to EIOPA’s recommendation, the NBS announced an integrated supervisory strategy and initiated several supervisory actions, including the launch of a sanctioning procedure against the insurer. 

Based on a careful monitoring, the Commission welcomes the actions taken by the Slovak supervisor since EIOPA issued the recommendation. However, the Commission notes that as long as no decisive supervisory measures have been taken, the NBS is not compliant with the Solvency II Directive. For those reasons, the Commission considers that the Slovak supervisor should make additional efforts, in particular to finalise the sanctioning procedure and adopt final conclusive supervisory actions that ensure compliance with Union law.

Commissioner for financial services, financial stability and Capital Markets Union, Mairead McGuinness, said: “Introduced in 2016, Solvency II was a major change in the European rulebook for insurers, aligning prudential rules with state-of-the-art risk management practices. In the years since, it has worked well and strengthened the insurance market to the benefit of policyholders and firms – but we need to ensure that it is enforced with the same high standards across the EU. We fully support EIOPA in its commitment to ensure compliance with Union law and we hope that the Slovak supervisory authority will implement the recommended actions in a swift and timely manner.”

Next Steps

Národná banka Slovenska (NBS), has ten working days upon receipt of the opinion to inform the Commission and the European Insurance and Occupational Pensions Authority of the measures it intends to take to comply with its obligations. The NBS has four months following the communication of the opinion to adopt final conclusive supervisory action ensuring compliance with Union law.   

Background

Article 17(1) of Regulation (EU) No 1094/2010 (EIOPA Regulation) empowers EIOPA to investigate potential breaches of sectoral legislation falling under its remit by competent authorities. If a breach is established, EIOPA provides recommendation to the national competent authority concerned on actions necessary to restore compliance with Union law.

The Commission is entrusted with monitoring the follow up given by national competent authorities in the context of breach of Union law recommendations issued by the European Supervisory Authorities (ESAs). In case of non-compliance with the ESAs recommendation, the European Commission may issue a formal opinion addressed to the national competent authority. In this case, the Commission is acting in accordance with its role as set out in Article 17 of the EIOPA Regulation.