EU system needed for dealing with failing insurers, EU official says

A new mechanism for shutting failing insurers smoothly could help maintain trust in the sector, a senior European Commission official said on Tuesday.

Banks have a “resolution and recovery” framework that allows regulators to quickly close down an insurer in trouble.

John Berrigan, who heads financial services at the EU executive, said such a framework was probably needed for insurers as well.

“It could strengthen the trust in the single market for insurance,” Berrigan told an Insurance Europe event.

He said the EU’s basic insurance capital rules, known as Solvency II, were working well and have proved themselves during COVID-19, but indicated that some tweaks were needed.