Cross-border Insurance in Europe: Challenges for Supervision
Forthcoming in The Geneva Papers on Risk and Insurance
Duisenberg School of Finance Policy Paper No. 45
31 Pages Posted: 21 Nov 2014 Last revised: 25 Nov 2015
Date Written: November 24, 2015
Abstract
At the start of Solvency II in January 2016, there is no overview of the insurance market in Europe. This paper develops a methodology to link various datasets on foreign branches and subsidiaries. The result is a new and comprehensive dataset of cross-border insurance in Europe. We find that cross-border business in insurance is higher than in banking. We also find that the share of cross-border insurance has increased over the last decade, notwithstanding the global financial crisis.
EIOPA, the European supervisory authority, plays a coordinating role among the national supervisors in the approval of internal models under Solvency II. Game theory suggests that there are limits to the coordination model. The increasing share of cross-border insurance, documented in this paper, may tilt the supervisory balance from coordination towards centralisation in an Insurance Union.
Keywords: insurance markets; measures for internationalisation; level playing field; financial supervision
JEL Classification: G22, G18
Suggested Citation: Suggested Citation