EIOPA has published a helpful FAQ in a staff paper on the upcoming Insurance Recovery and Resolution Directive (IRRD). A few of the highlights:
- Resolution vs supervision - the resolution authority should be separate from the supervisory authority to avoid conflicts between the supervisory interests and the resolution interests. However, the insurance resolution function can be a separate part of the existing supervisory authority, with a separate budget and reporting lines, not just an additional task for the supervisor.
- Resolution vs liquidation - whether a failing insurer is subject to resolution or ordinary liquidation proceedings will be determined by the "public interest" test. Where an insurer is failing or likely to fail and there is no reasonable prospect of preventing failure, and the resolution process is not in the public interest, the insurer should be wound up through normal insolvency proceedings.
- Funding - the IRRD does not set out how Member States are to fund resolution processes. In Ireland, this could lead to additional levies on insurers.
EIOPA staff paper - Frequently asked questions about IRRD - 2022
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.