One of EIOPA’s key responsibilities is to ensure coordinated crisis prevention and management, as well as to preserve financial stability in crisis situations. EIOPA’s crisis prevention tasks can be split into three dimensions:
- The internal dimension, defining processes and procedures for EIOPA to be prepared for and act efficiently in crisis situations;
- The microprudential dimension, which focuses on risks affecting individual institutions, in particular, with respect to those that may pose a systemic risk; and
- The macroprudential dimension, which seeks to identify sources of systemic risk and potential macroprudential measures to address them.
The Regulation establishing EIOPA allocates to the Authority the following tasks, which are undertaken as part of EIOPA's approach to crisis prevention and management:
1. Crisis prevention and management
- In the event of adverse developments, EIOPA should actively facilitate and, where deemed necessary, coordinate actions of the relevant national supervisory authorities.
- If EIOPA considers that an emergency situation may arise, it can issue a confidential recommendation addressed to the Council of the EU.
- If the Council declares the existence of an emergency situation and if certain conditions are met, EIOPA can adopt individual decisions that would require national supervisors to take necessary actions in order to address the emergency situation. If further conditions are met, the Authority can adopt an individual decision directly addressed to a financial institution requiring the necessary action to be taken.
2. Recovery and resolution
- EIOPA should contribute to and participate actively in the development and coordination of effective and consistent recovery and resolution plans, procedures in emergency situations and preventive measures to minimise the systemic impact of any failure.
- The Authority should contribute to the assessment of the need for a European network of national insurance guarantee schemes which is adequately funded and sufficiently harmonised.
- EIOPA should work on identifying best practices aimed at facilitating the resolution of failing cross-border groups and other financial institutions in order to avoid contagion.
3. Macroprudential policy in insurance
- EIOPA should ensure that it has specialised and ongoing capacity to respond effectively to the materialisation of systemic risks, in particular with respect to institutions that pose a systemic risk. To this end, EIOPA has initiated the publication of a series of papers on systemic risk and macroprudential policy in insurance.
4. Participation in global fora and Crisis Management Groups
- An important element to carry out EIOPA's tasks is the exchange of information between national authorities and participation in different fora. For this purpose, EIOPA has set up several Project Groups and participates in relevant fora both at the EU level (e.g. ESRB) and at the level of IAIS.
- The participation and contribution of EIOPA at the relevant Crisis Management Groups of the Global Systemically Important Insurers (G-SIIs) headquartered in the EU, is also of particular importance.