FRANKFURT (Reuters) - The European Union’s insurance watchdog called for harmonized insurance guarantee schemes on Wednesday, saying they can contribute to protecting policyholders and that the current hodgepodge of rules across the bloc was unsatisfactory.
Guarantees, which provide protection to consumers when insurers are unable to fulfill their commitments, are nonexistent in some countries, said Gabriel Bernardino, chairman of the European Insurance and Occupational Authority (EIOPA).
In others, they may discriminate against residents who aren’t citizens of that country. And in some cases, individuals may be get double coverage - from their home country and their country of residence.
“This is completely suboptimal. Let’s face it,” Bernardino said.
He said the insurance watchdog was beginning to study schemes across the EU, which differ substantially in financing, functions, mandate and coverage, and would issue a policy paper for discussion in 2018.
“This fragmentation creates particular problems in the presence of failures involving cross-border business,” Bernardino told a conference of insurance regulators.
Earlier this year, EIOPA called for a harmonized scheme to deal with failing insurers, an effort Bernardino underscored on Wednesday.
“European action is required,” Bernardino said.
The EIOPA chief also addressed Britain’s decision to leave the European Union, urging companies to prepare for a “cliff edge” Brexit scenario.
“I believe that it is now more than crucial that all insurance groups properly assess the risks of a ‘cliff edge’ scenario to their business and consider all possible solutions to mitigate them under the available regulatory framework,” he said.
“We see a lot of talk, not so much walk,” he said. “People need to walk the talk.”
Reporting by Tom Sims; Editing by Maria Sheahan and David Evans