On 22 September 2010, the European Parliament approved a sweeping overhaul of financial supervision in Europe, including the creation of a new supervisory authority for insurance and reinsurance – the European Insurance and Occupational Pensions Authority (EIOPA) – and a European Systemic Risk Board (ESRB) which will monitor threats to the EU economy as a whole. It is expected that EIOPA, ESRB and two further new authorities – dealing with the banking and securities sectors – will begin work on 1 January 2011.

EIOPA will be headquartered in Frankfurt and will replace, with enhanced powers, the current Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). It is mandated to improve the functioning and transparency of the markets and to protect the stability of the financial system. EIOPA is also mandated to address compliance with laws, in particular those related with systemic and cross-border risks.

In pursuing these objectives, EIOPA will have a range of powers, including:

– to propose regulatory technical standards to the European Parliament and Council;

– to issue guidelines and recommendations addressed to competent authorities in the member states or to individual firms;

– to issue recommendations in cases where a competent authority has not applied European law or has applied it in a manner which appears to breach European law;

– to address decisions to specific competent authorities if an emergency situation arises or if there is a disagreement between competent authorities where joint action is required;

– to address decisions to individual firms if a competent authority continues to fail to apply European law or fails to apply a decision of EIOPA in an emergency situation or a disagreement between authorities; and

– to fulfil the other tasks allocated to CEIOPS under the insurance and reinsurance directives.

The press release can be found by clicking here, and the draft Regulation, as approved by Parliament, can be found by clicking here.