European Insurance and Occupational Pensions Authority (EIOPA)
The 2008 financial crisis brought to light shortcomings in European Union (EU) financial supervision. Based in Frankfurt, the European Insurance and Occupational Pensions Authority (EIOPA) was created in 2010 to prevent the risks of destabilising the insurance sector.
Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC.
It sets up EIOPA, an EU body that supports coordination between national authorities and ensures the consistent application of EU laws for the insurance and occupational pensions sectors in EU countries.
Consistent application of law
EIOPA draws up regulatory and technical standards that accompany laws adopted by the Council and the European Parliament for insurance companies, financial conglomerates (large financial companies active in various financial sectors), occupational pensions and insurance intermediaries (businesses selling pensions and insurance policies). It also has the power to issue guidelines and recommendations on the application of European law.
EIOPA is tasked with ensuring the stability of insurance markets and the protection of policyholders, pension scheme members and beneficiaries. For instance, it monitors consumer trends and assesses potential risks and vulnerabilities of the markets. Under certain strict conditions, it can temporarily prohibit or restrict financial activities that cause a threat to the stability of the financial system.
Breach of law
EIOPA has the power to investigate a breach of law by a national authority. This arises when the latter fails to ensure that a financial institution complies with European law.
Within 2 months, EIOPA can issue a recommendation to the national authority. Then the European Commission may issue a formal opinion requiring the authority to take the necessary action to comply with the law. If the national authority’s non-compliance persists, EIOPA may directly address a decision to a financial institution under certain strict conditions. This decision prevails over previous decisions taken by the national authority.
European financial supervision
EIOPA is part of the European System of Financial Supervision created in 2010, and which comprises three other supervisory organisations:
the supervisory authority in charge of the financial markets, based in Paris (European Securities and Markets Authority);
the supervisory authority in charge of the banking sector, based in London (European Banking Authority);
the European Systemic Risk Board responsible for the overall oversight of the EU’s financial stability, based in Frankfurt.
For more information, see the EIOPA website.
Regulation (EU) No 1094/2010
Council Regulation (EU) No 1096/2010 of 17 November 2010 conferring specific tasks upon the European Central Bank concerning the functioning of the European Systemic Risk Board (Official Journal L 331 of 15.12.2010, pp. 162-164).
Directive 2010/78/EU of the European Parliament and of the Council of 24 November 2010 amending Directives 98/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC and 2009/65/EC in respect of the powers of the European Supervisory Authority (European Banking Authority), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority) (Official Journal L 331 of 15.12.2010, pp. 120-161).
Commission Decision 2004/9/EC of 5 November 2003 establishing the European Insurance and Occupational Pensions Committee (Official Journal L 3 of 7.1.2004, pp. 34-35).