1 “Towards true integration by 2009” Committee of European Insurance and Occupational Pensions Supervisors Klaas Knot FESE Convention 26 May 2005

2 Integration Importance of true integration for internal market acknowledged; regulation and supervision Called for by industry Note: differences between CEBS, CESR, CEIOPS in phase of regulation  supervision Also some sectoral characteristics:  Product  Market structure  Importance of entity supervision and thus of home supervisor

3 Phase of CEIOPS environment Insurance i.a.:  Dominated by fundamental revision “Solvency II”  Reinsurance directive (final phase) Pensions:  Implementation directive Focus is on new regulation rather than convergence of supervisory practice within an established regime:  Regulation as a precondition for meaningful supervisory convergence  Advice to level 1 and 2  No discussion yet on mediation/conflict resolution

4 Solvency II project Creation of an overall prudential system (technical provisions and solvency capital) Prospective and risk-oriented approach Three pillar structure:  quantitative requirements (pillar-1),  supervisory activities (pillar-2) and  supervisory reporting and public disclosure (pillar-3) Incentives for proper risk management by insurers Transparency, harmonisation and convergence (European and international level, cross-sector)

5 Importance of integration Solvency-II aims to  ensure consistency across financial sectors  promote international convergence  ensure convergence of valuation and limit administrative burden Related international developments:  International Association of Insurance Supervisors (IAIS)  International Accounting Standards Board (IASB)  Basel Committee (Basel-II) Group supervision:  Market structure is recognised  Expected to be strengthened (FCD-model)

6 Work plan Solvency II Calls for Advice (CEIOPS) First wave (focus pillar-2) => June 2005 Second wave (focus pillar-1) => October 2005 Third wave => February 2006 October 2006: Framework Directive Implementing measures Implementation 2010 (?) Open and transparent process (e.g. public consultations, documents on internet )

7 Current work CEIOPS for Solvency II Reply to calls for advice to the European Commission Advice intended to support the drafting of a Framework directive, but also of relevance to future level 2 regulation and level 3 supervisory guidance Advice includes:  Quantitative issues  Qualitative issues  Supervisory cooperation and exchange of information  Role of ‘Peer Reviews ’

8 Other CEIOPS work streams Financial Stability :  regular reporting on situation of the insurance markets & impact on financial stability  Quantitative Impact Study (QIS) for Solvency II Insurance Groups supervision:  Supervisory practice further to Insurance Groups Directive (IGD) and Helsinki protocol  Advice on amendments to IGD Pensions:  Implementation directive  Cooperation protocol

9 Conclusions Earlier phase in the process: development of revised regime for prudential supervision conditional for further convergence Forthcoming directive and level 2 regulation supported by CEIOPS advice Level 3 activities are being developed; also desired by the industry Some sectoral characteristics