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Rapporteur slams EU insurance scheme

Wednesday 26 January 2011 - by Andrew Hickley

Peter Skinner MEP

A European Parliament rapporteur for a report into insurance guarantee schemes has lambasted a Commission proposal for the introduction of a fund to protect consumers from the failure of insurance companies.

In an Economic and Monetary Affairs committee meeting on Tuesday, Peter Skinner MEP took exception to the facility, proposed in a Commission white paper, for treating insurers akin to systemically important banking institutions.

Noting that the Solvency II Directive aims to provide a 99.5 per cent guarantee that systemically important insurers will not fail, Skinner asserted that new capital requirements means the IGS is unnecessary.

"Insurance is becoming something that everyone is starting to think is like banking. We've got to stop that thinking and you've got to stop that thinking to some degree," he said to a Commission official, who had attempted to justify a 27 state-wide guarantee scheme.

"It's an over-response - a belt, braces and mouth guard. It just seems as if we've gone a bit too far."


First suggested in the influential de Larosiere report of 2009, the Commission proposed the system to ensure that that depositors' funds are safe in the event of a large insurer failing.

While ECON chair Sharon Bowles MEP acknowledged that the panel had urged the Commission to look into an IGS scheme, she agreed that the sheer diversity in current systems operated by some 12 member states leaves little room, and less benefit, for harmonisation.

Bowles said: "Guarantees should be a last resort. We're getting dangerously close to having so much consumer protection that not only is it very expensive, but that the consumer won't bother to think, which is the most dangerous thing you can do."


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