Changes from report parliamentary committee draft to plenary report

RemovedClarification that this concerns assets and liabilities related to the reinsurance contract, not just any assets and liabilities.

Added(36) Resolution tools should be designed and suitable to counter a broad set of largely unpredictable scenarios, taking into account that there could be a difference between a single insurance or reinsurance undertaking in crisis and a broader systemic crisis. Resolution tools should therefore cover each of those scenarios, including the solvent run-off of the undertaking under resolution until its termination, the sale of the business or shares of the undertaking under resolution, the setting up of a bridge undertaking, the separation of assets and liabilities from the impaired or under-performing portfolios of the failing undertaking, and the write-down or conversion of capital instruments and other eligible liabilities of the failing insurance or reinsurance undertaking.

RemovedTitle VII – title: AMENDMENTS TO DIRECTIVES 2002/47/EC, 2004/25/EC, 2007/36/EC, (EU) 2017/1132 AND TO REGULATIONS (EU) No 1094/2010 AND (EU) No 648/2012

Added(37) Where resolution tools have been used to transfer insurance portfolios to a sound entity, which could be a private sector purchaser or a bridge undertaking, the residual part of the undertaking should be liquidated within an appropriate time frame. The length of that time frame should be based on the need for the failing insurance or reinsurance undertaking to provide services or support to enable the private sector purchaser or bridge undertaking to carry out the activities or services acquired by virtue of that transfer.

RemovedShareholder Rights Directive is missing, Solvency II should not be changed.

Added(37a) Financing arrangements should be established in each Member State to compensate policy holders of insurance and reinsurance undertakings authorised in that Member State. While directly absorbing the losses of an insurance company should be avoided, it should be possible to use such financing arrangements to finance other costs associated with the use of resolution tools as a last resort , to the extent necessary to achieve the resolution objectives and insofar as the resolution principles are fully respected. Acknowledging the diversity in insurance markets, Member States should be given some flexibility in relation to the precise arrangements of external financing as long as the availability of sufficient liquidity to guarantee compensation within a reasonable timeframe is ensured. A Member State should impose a contribution obligation only to insurance and reinsurance undertakings authorised in that Member State and to Union branches of a third country undertaking which are established in its territory.

RemovedDirective 2009/138/EU

Added(38) The sale of business tool should enable resolution authorities to effect a sale of the insurance or reinsurance undertaking or parts of its business to one or more purchasers without the consent of shareholders. When applying the sale of business tool, authorities should make arrangements for the marketing of that insurance or reinsurance undertaking or part of its business in an open, transparent and non-discriminatory process, while maximising the sale price as much as possible. Where, for reasons of urgency, such a process is impossible, authorities should take steps to redress detrimental effects on competition and on the internal market.

RemovedArticle 83, Article 141: deleted

Added(39) Any net proceeds from the transfer of assets or liabilities of the undertaking under resolution when applying the sale of business tool should benefit the undertaking left in the winding up proceedings. Any net proceeds from the transfer of shares or other instruments of ownership issued by the undertaking under resolution when applying the sale of business tool should benefit the owners of those shares or other instruments of ownership. Proceeds should be calculated net of the costs arisen from the failure of the insurance or reinsurance undertaking and from the resolution process.

RemovedSolvency II should not be changed via this directive.

Added(40) Information concerning the marketing of a failing insurance or reinsurance undertaking and negotiations with potential acquirers prior to the application of the sale of business tool are likely to be sensitive and may pose risks for the trust in the insurance market. It is therefore important to ensure that the disclosure to the public of such information, which is required by Regulation (EU) No 596/2014 of the European Parliament and of the Council, can be delayed for the time necessary to plan and structure the resolution of the insurance or reinsurance undertaking.

RemovedArticle 91 a (new): Article 91a / Insurance Guarantee Schemes / By 1 January 2024, the Commission, after having consulted EIOPA, shall submit a report to the European Parliament and to the Council outlining the necessary steps to introduce minimum common standards for insurance guarantee schemes within the European Union. That report shall at least: / - assess the state of play of insurance guarantee schemes in Member States (coverage level, types of insurances covered, triggers); / - discuss policy options; / - outline the necessary steps to introduce a minimum baseline for insurance guarantee schemes across the Union; / - analyse the corresponding necessary changes to other legislative acts. / The report shall be accompanied by a legislative proposal where appropriate.

Added(41) A bridge undertaking is an insurance or reinsurance undertaking that is wholly or partially owned by one or more public authorities or controlled by the resolution authority. The main purpose of a bridge undertaking is to ensure that critical functions continue to be provided to the policy holders of the failing insurance or reinsurance undertaking. A bridge undertaking should therefore be operated as a viable going concern and should be put back on the market as soon as conditions are appropriate, or be wound up in case the bridge undertaking is not viable.

RemovedThe Insurance Recovery and Resolution regime is not credible without a minimum level of harmonisation of insurance guarantee schemes.

Added(42) The asset and liability separation tool should enable authorities to transfer assets, rights or liabilities of an undertaking under resolution to a separate vehicle in order to remove, manage and wind down such assets, rights or liabilities. To prevent an undue competitive advantage for the failing insurance or reinsurance undertaking, the asset and liability tool should be used only in conjunction with other tools.