Keeping watch on giants: The supervision of insurance group and of insurance undertakings within financial conglomerates in European law


Nowadays, ever more insurers are part of groups which may be based in many countries around the world and may also include other financial intermediaries or commercial and industrial entities. The growingly complex and international character of insurance groups stands in contrast with the fact that insurance supervision is essentially conducted on a legal entity basis by national authorities. Though supplementary supervision at the group level is carried out, solo supervision, indeed, is the norm. In this context, the financial crisis has highlighted the need for a more effective group-wide supervision.

This paper deals with the European legal framework concerning the organizational form of supervision on a group-wide basis of (re)insurance undertakings that belong to insurance groups and financial conglomerates. To this end, the relevant provisions of the Insurance Groups Directive, Solvency II Directive and Financial Conglomerates Directive are considered. The importance of the European regulation on this point emerges when we take into account the fact that Europe occupies a leading position as the home country of the largest insurance groups.

In particular, the work highlights the evolution of insurance group supervision. Compared to the supervisory system under the Insurance Groups Directive, the Solvency II’s system, indeed, seems more efficient and adequate to ensure effective group supervision. Solvency II provides for uniform and detailed rules at the Community level, allowing for a more level playing field; it also takes in due account the need for a tailor-made approach to group supervision. Further, appropriate tasks are assigned to the group supervisor and to the college of supervisors.

The organizational form of group supervision under the Solvency II Directive is aligned to that set out by the Financial Conglomerates Directive with regard to financial conglomerates. Both the Directives establish the appointment of a supervisory authority responsible for the exercising of the supervision respectively at the level of the insurance group (group supervisor) and of the financial conglomerate (coordinator) and they both provide for supervisory colleges. The group supervisor and the coordinator ensure that relevant supervisory activities and information are coordinated at the group- wide level, reducing duplicative efforts among both the supervisors and the entities subject to supervision. The functioning of the college of supervisors, then, facilitates a coordinated approach to supervision and fosters cooperation between supervisors.

The regulatory systems of supervision considered enable the competent authorities to adjust the exercise of the supervisory powers to the complexity of the entities subject to supervision, providing for a proper application of the proportionality principle.