On 21 December 2023, the European Insurance and Occupational Pensions Authority (EIOPA), in a significant update to its strategic plan, unveiled its Supervisory Convergence Plan for 2024, marking a pivotal step toward fostering a cohesive supervisory culture across the European Union (EU). The initial news item regarding the initiative can be explored here.
Background
In alignment with its mandate to fortify supervisory unity, EIOPA's 2024 plan is strategically centred on three core areas. Firstly, EIOPA aims to further embed the key characteristics of a common supervisory culture, emphasising risk-based and proportionate approaches. The ongoing development of supervisory tools will be a pivotal aspect to ensure effective and consistent supervision across the EU. Secondly, the plan addresses risks to the internal market and strives to maintain a level playing field. EIOPA will actively work to mitigate risks that could create unfair advantages or disadvantages for market participants. Thirdly, EIOPA aims to proactively supervise emerging risks that may impact policyholders and financial stability. This includes a comprehensive approach to assessing conduct risks and supervisory responses to Environmental, Social, and Governance (ESG) risks.
As part of these initiatives, EIOPA is set to conduct a comprehensive review of the guidelines on the Supervisory Review Process linked to Solvency II. Additionally, the authority will consistently enhance supervisory assessments concerning conduct risks and refine its approaches to ESG risks. An important highlight is the prioritisation of implementing the new Digital Operational Resilience Act (DORA).
Consequences and Changes to the Law
The publication of the Supervisory Convergence Plan provides a significant shift in the regulatory landscape. By focusing on common supervisory practices and convergence tools, EIOPA aims to ensure consistent and effective supervision throughout EU member states.
The upcoming review of Solvency II-related guidelines indicates a dynamic approach to adapt regulatory frameworks to evolving circumstances. The objective is to assess and enhance the guidelines to reflect the lessons learned from National Competent Authorities (NCAs) and align them with emerging trends in the macro-economic environment and digitalisation. The increased attention to conduct risks and ESG factors underlines a broader regulatory perspective that aligns with contemporary concerns.
This comprehensive plan reflects EIOPA's commitment to staying ahead of evolving challenges and ensuring effective supervisory convergence across the EU. The agency encourages collaboration between EIOPA and NCAs to develop common benchmarks, perform reviews, engage in challenging interactions, and provide the necessary support to achieve supervisory convergence.
The full Supervisory Convergence Plan for 2024, including detailed initiatives and priorities, is available on EIOPA's official website.
By Eva Manolova
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