Major merger of insurance watchdog and EBA in doubt

Chairperson highlights potential issues surrounding proposed synergies

Major merger of insurance watchdog and EBA in doubt

Insurance News

By Paolo Taruc

The head of the European Banking Authority (EBA) claims that a merger with the EU’s insurance watchdog would lead to “no material benefit” in savings because resources are “already very slim.”

This comes after a public consultation launched by the European Commission (EC) floated the idea of a “twin-peaks” model for European Supervisory Authorities (ESAs) by merging EBA and the European Insurance and Occupational Pensions Authority (EIOPA).

In an opinion paper published yesterday, EBA chairperson Andrea Eria said the proposed merger is “unlikely to create significant synergies in the core business of the authorities (regulation and supervision).”

But there could also be “possible synergies” in areas where ESAs are currently understaffed and could join forces, the official added. “This would be the case, for instance, in areas such as impact assessment, economic analysis, statistics, data management, human resources and procurement.”

Under a twin peaks model, there is one prudential regulator or supervisor for financial institutions and another counterpart for market conduct.

The EBA, EIOPA, and the European Securities and Markets Authority (ESMA) form the current triad of ESAs. In its consultation document, the EC said “the contours of this tripartite regulatory and supervisory division have blurred,” as financial markets have evolved and become more complex and interconnected.

The document said several EU member states have moved towards more integration, either in the form of a single, unified authority that covers prudential, conduct and consumer protection of all financial sectors (such as Germany, Poland, and Sweden) or some type of twin peaks model. 

“The merger would reinforce the need for a review of governance arrangements in order to ensure an effective and efficient balance between benefiting from the input of supervisors in different sectors and achieving the benefits of a cross-sectoral approach,” said Eria.

Related stories:
Insurance industry to work proactively with new regulator
Senior UK insurance regulator to quit

Keep up with the latest news and events

Join our mailing list, it’s free!