Regulating insurers in the European Union should be removed from member states and handed to a powerful bloc-wide body that can push through reform such as simpler information for policyholders, the bloc's insurance watchdog said today.
Gabriel Bernardino is chair of the European Insurance and Occupational Pensions Authority (EIOPA).
He said current disclosures to policyholders fail to meet their intended aims.
"They remain too complex, burdensome and are usually not read by consumers. Too much information kills information," Bernardino told an EIOPA webinar.
Yet more incremental changes was not the answer and a "profound reassessment" was needed to replace all existing information requirements across the range of EU insurance laws with a single set of information, he said.
"This new approach should result in radically simpler consumer disclosures and should be accompanied by enhanced conduct supervision and enforcement by supervisors against poor or misleading practices, including the use of product intervention powers, where necessary," Bernardino said.
The current system of national insurance regulators presented fundamental differences and challenges for implementing EU rules consistently, he said.
"In reforming the current system, the centralisation of some elements of insurance supervision in the EU is imperative," said Bernardino, who is due to stand down after 10 years in the job.
After the euro zone debt crisis, the EU introduced a single supervisory mechanism for top euro zone banks which are now regulated by a powerful arm of the European Central Bank.
"A single supervisory mechanism for insurance is needed, and its absence is mostly felt in crises like the one that we are currently living," Bernardino said.
EIOPA's powers to override national regulators is limited, as highlighted by its attempt last year to suspend dividends at insurers until the full fallout from Covid-19 lockdowns on the economy became clearer.
Germany's BaFin, a member of EIOPA, chose to allow Allianz to pay a dividend.