FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 17, 2022. REUTERS/Yves Herman
By Huw Jones
LONDON (Reuters) -Harmonised insurance protection schemes of last resort are needed across the European Union as consumers increasingly buy policies from outside their country, the bloc’s insurance regulator said on Tuesday.
Petra Hielkema, chair of the European Insurance and Occupational Pensions Authority (EIOPA), said cross-border premiums have been steadily increasing over the past five years compared with domestic premiums.
It also means that consumers are buying policies without knowing who is ultimately responsible if things go wrong, she said.
“Unfortunately we are seeing more cases, with policyholders in one member state receiving less protection and in case of failure less compensation than policyholders in another member state,” Hielkema told EIOPA’s annual conference.
“That, in my opinion, is unacceptable. It is therefore that EIOPA stresses that minimum harmonisation of insurance guarantee schemes is very much needed.”
Insurers are regulated by their home supervisor, with EIOPA and watchdogs in EU states where products are sold by insurers from elsewhere in the bloc having little say over them.
The EU is currently amending its insurance rules and Hielkema said she was in discussion with the European Parliament on possible new powers, such as issuing a product warning, making binding recommendations to a national regulator, and stopping new sales of poor value products.
“When we talk to EU institutions, they listen, they see the need to support us on this,” she told reporters.
The EU has set up a single banking supervisor, the European Central Bank, to directly regulate big banks in the euro zone.
Nevertheless, efforts by euro zone finance ministers to go further and create a common bank deposit guarantee system failed again last week as some states fear they will end up helping weaker banks in other countries.
Hielkema said there was no appetite for a single insurance supervisor like the ECB, but there was a need to better harmonise insurance policy protection and police poor value products more effectively.
“The problem will not go away,” she said.