DIE GRÜNEN | EFA im Europäischen Parlament Sven Giegold Am 25. Mai:Grün für ein besseres Europa
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Solvency II / Omnibus II: Lobby Festival in the European Parliament

The Lisbon treaty, the new European supervisory authorities and the experiences of the financial crisis all required changes to the legislative framework for the European insurance industry (Solvency II). The so called Omnibus II directive drafted to implement those adjustments. The file was blocked in Council and Commission for a long time, because of divergent interests of the respective insurance groups. Finally, the wishes of the member states were included in a big package deal in the Commission proposal “Omnibus II” and the corresponding draft implementing measures. Today the ECON voted on the European Parliament’s position (report Balz, CDU/EPP).

Sven Giegold, Green shadow rapporteur and spokesperson in the Economic and Monetary Committee (ECON) declared:

Today was a good day for the insurance lobby and a bad day for policy holders and tax payers. The insurance lobby managed to confirm all its wishes it had already obtained from Commission and Council. The European Parliament failed to overcome regulatory capture by divergent national business interests and to develop a truly European crisis response for the insurance industry. The “Omnibus II” deal in the European Parliament falls even behind Commission and the Council positions.

By a series of measures the protection of policy holders was weakened. The matching premium is tailor made UK and Spanish insurers. The counter cyclical premium (CCP) pleases French and Italian corporations. A totally unjustified treatment of participations will generate profits for Italian insurance corporations. The new extrapolation rules are welcomed by German life insurers. (1) All the changes to the Solvency II framework are not impact assessed and are therefore an example of bad legislation. The reduction in technical provisions will likely exceed 100 bn Euros.The legislative process was a case study in  the dominance of vested interests of financial lobbies over general interests of consumer protection, financial stability and tax payers. The rapporteur and the majority of shadow rapporteurs including the Greens were on track for a compromise balancing justified industry interests and the common good. Academic advice supported a critical position towards the matching premium. The European Systemic Risk Board (ESRB) warned against the CCP as unsymmetrically lowering technical provisions in bad times without building reserves in good times. But the Socialist shadow Skinner (undisturbed by his group), the ECR shadow Fox and the insurance lobby of Spain, Italy and the UK, helped by their respective governments, managed to turn majorities around along national lines. Consumer organizations and unions were totally absent on this highly technical dossier with nevertheless strong effects for the lives of ordinary citizens. Finally, the rapporteur, socialist and liberals agreed with a compromise that pleased all key national vested interests. Good regulation in a social common European market was clearly not guiding the majority.

A truly black day for everyone who hopes that the European Parliament could overcome national interest driven regulatory capture in the financial industry.

(1) Extrapolation: Legislatively set figures on profitability of long-term investments

A Background paper with further explanations can be found here.

2 Kommentare: “Solvency II / Omnibus II: Lobby Festival in the European Parliament

  1. Dear Sven, thank you for trying to protect consumer interest and common interest. I agree that this result is a truly black day for everyone who hopes that the European Parliament could overcome national interest driven regulatory capture in the financial industry. This is not an industry that is build to think long term or public interest, nor should they. It is the resonsability by regulartory governance. The financial industry is not a partner but a counterpart. That is why we need strong cross border regulation. Please let me quote Thomas Jefferson, 3rd president of US (1743 – 1826):«I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.»

    Keep up your consumer voice Sven!

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