Insurance Europe calls for a pause on IRRD to ensure proportionate regulation and EU competitiveness

Insurance Europe, the European insurance and reinsurance federation, is calling on the European Commission to 'stop the clock' on the implementation of the Insurance Recovery and Resolution Directive (IRRD). This call comes amid the EU's renewed focus on boosting competitiveness and simplifying regulatory requirements for European businesses - one of the EU's top strategic priorities.

A call for smarter, proportionate regulation

The IRRD, as currently drafted, risks imposing disproportionate and unnecessary burdens on insurers across Europe. The proposed framework goes well beyond international standards and introduces requirements that are significantly more complex and costly than those in other major jurisdictions. This threatens to undermine the competitiveness of EU insurers and runs counter to the latest European Council conclusions which "urges the Commission and the co-legislators to accelerate their work, as a matter of utmost priority, on all files with a simplification or competitiveness dimension." The proposed 'stop the clock' is a practical example of smarter, more proportionate regulation needed to strengthen the EU's competitiveness.

Key concerns: complexity, cost, and limited benefit

• Disproportionate requirements: The IRRD's extensive reporting and planning obligations are not aligned with the low systemic risk posed by the insurance sector.
• Limited impact on financial stability: Evidence shows that the insurance sector poses minimal systemic risk, and existing frameworks like Solvency II already provide robust safeguards.
• Administrative burden and costs: The IRRD's broad scope, challenging timelines, and overlapping requirements with other initiatives risk overwhelming insurers and ultimately increasing costs for policyholders.
• International disadvantage: Other jurisdictions have adopted more proportionate, risk-based approaches, avoiding arbitrary thresholds and excessive reporting.

A practical solution: pause and rethink

Insurance Europe calls for an immediate pause in the IRRD legislative process. This 'stop the clock' initiative would allow policymakers, EIOPA, and industry stakeholders to conduct a thorough impact assessment of what is truly necessary to protect policyholders and financial stability in relation to failing insurance companies.

"The insurance industry recognises the benefits of being well prepared for situations of severe financial distress. Nevertheless, we remain sceptical of the IRRD's added value because the Solvency II prudential regime already provides extensive safeguards against the risk of a failing insurer which mitigate the need for far-reaching recovery and resolution tools." said Angus Scorgie, Head of Prudential Regulation & International Affairs. "A stop-the-clock on the IRRD would give a welcome opportunity to simplify and rationalise, ensuring it meets its objectives without disproportionate burdens on European insurers."

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