Writes Dick Roche

EU Regulation (EC) No 1049/2001  aims to ensure that EU citizens can exercise their right of access to all documents held by the EU institutions. The EU Charter of Fundamental Rights also guarantees EU citizens the right of Access to documents held by EU institutions.  Article 15 of the Treaty on the Functioning of the European Union requires that the “Union’s institutions bodies offices and agencies shall conduct their work as openly as possible” and again enshrines a legal right of access to documents held by EU institutions and agencies.

While these guarantees are clear, one significant EU body, the European Insurance and Occupational Pensions Authority (EIOPA), has assumed the right to operate as if EU commitments to openness were never made.

Two cases that have been playing out recently demonstrate the extraordinary secrecy with which EIOPA seeks to shroud its operations.
 

The Euroins Case

On 2nd February 2023 the Romanian Financial Supervisory Authority, ASF, published a devastating permanent capital report on Euroins Romania, alleging  a capital “shortfall of  € 400 million in relation to the solvency capital requirement and of € 320 million in relation to the minimum capital requirement. ”  No such concern featured in previous ASF reviews. Indeed, in 2019 ASF ‘requested’ Euroins to take over City Insurance Romania’s largest motor insurance provider which was in difficulties –  a request that Euroins refused.

Following release of the ASF report the company, part of the Euroins Insurance Group (EIG), one of the largest independent insurance groups in Central and Eastern Europe, turned to EIOPA requesting an extraordinary meeting of the relevant Solvency II College of Supervisors and a full review conducted by independent experts, of its financial position.

EIOPA responded that a Colleges of Supervisors meeting had already been held been held. On the question of an independent review it made the point that “day-to-day supervision is the exclusive competence and responsibility of the national supervisory authorities”, a mantra repeatedly used in the months that followed.

Instead of taking up the proposal for an independent review, EIOPA decided to conduct a behind-closed-doors assessment of  Euroins Romania’s position.

Remarkably neither the EIOPA report itself nor the preparatory steps EIOPA took to prepare it were disclosed to Euroins Romania or with EIG.

The Bulgarian Financial Supervision Commission (FSC), the national supervisory authority for the Euroins Insurance Group and the European Bank for Reconstruction and Development (EBRD) also approached EIOPA.

FSC registered concerns regarding the actions of the Romania regulator. Its intervention got nowhere.

The EBRD – which in 2021 invested over €20 million in EIG  to stabilise the Romanian insurance industry – made a robust intervention.  

The Bank questioned the assertion of a major capital deficiency in Euroins Romania, labelled ASF’s position as “a complete departure”  from previous positions taken by it, and challenged the regulator’s position on Euroins reinsurance contracts. While insisting that there was no liquidity crisis in Euroins Romania, ERBD  made the point that if such a problem existed or if additional capital was required remedial actions could have been taken to resolve both issues.

In the absence of a response to its approach from EIOPA, EBRD appointed a leading actuarial accounting firm to conduct “a rapid assessment” of Euroins’ position.
 

Keeping the EU Parliament in the dark

The EIOPA report on Euroins, “Assessment of the Gross-to-net Technical Provision of Euroins Romania in MTPL” was completed in late March 2023.  

The report has not been published, however, a key conclusion was revealed, apparently accidentally in a report by the Board of Appeal of the European Supervisory Authorities [BoA-D-2023-01 of 8 June 2023]. Paragraph 12 of this report reads “according to the EIOPA Report, Euroins Romania had a deficiency of the net best estimate for the MTPL business at the reference date of 30 September 2022. In EIOPA’s view, the deficiency was in the range between EUR 550 million and EUR 581 million” ^[1].

That conclusion differs dramatically from the three reports of Romania’s ASF issued before February 2023. It even differs from the figures set out in the controversial ASF report of 2 February 2023.

It also clashes dramatically with the independent review commissioned by ERBD. That  review, finalised within days of the EIOPA report, concluded that Euroins’ reinsurance contracts met the requirements of Solvency II for risk transfer and that Euroins Romania was solvent with no capital gap.  

From March 2023 until the closing weeks of the 9^th EU Parliament questions tabled on the Euroins case were stonewalled by the Commission.  Replies to PQs were defensive, evasive, misleading, and disingenuous.

The Commission failed to respond to questions about the sources of data used by EIOPA in preparing its report, or on EIOPA’s failure to consult with Euroins in its preparation.  When asked by MEPs to independently review the EIOPA report the Commission replied that it had “not received any evidence of irregularities related to the preparation or content of EIOPA’s report”.

On 4 April 2024  – as the term of the 9^th EU Parliament’s was concluding – the Commission admitted in in response to a PQ  [ E-000592/2024 ] that the EIOPA report had not been “shared” with it. The Commission had been concocting answers  to PQs on a report it had never seen.
 

EIOPA Strikes Again

A second example of EIOPA’s reluctance to be open or transparent is evident in a case involving NOVIS a life insurance company established in Slovakia and providing services in a number of EU countries.

In June 2023 the Slovakian national supervisory authority Národná Banka Slovenska (NBS) withdrew the authorisation of NOVIS to operate.

EIOPA and the Commission were – contradicting the mantra that “day-to-day supervision is the exclusive competence and responsibility of the national supervisory authorities” invoked repeatedly in the Euroins case -directly involved in driving that decision.  

In May 2022 EIOPA concluded that NOVIS’ operations were non-compliant with Solvency II and that NBS had failed to take the necessary corrective measures. In September the Commission, supporting the position taken by EIOPA, required NBS to “fully comply with the terms of Solvency II”

NOVIS challenged the decision to withdraw its authorisation in the courts.   It also lodged a request with EIOPA under Regulation 1049/2001 requesting access to documents relating to the case.

Echoing its approach in the Euroins case, EIOPA, which had identified nine documents relevant to the NOVIS request, denied access to all documents. It argued that refusal of access was necessary for “the protection of court proceedings”, the protection of  “inspections, investigations and audits” and for the protection of its own decision-making process – a novel interpretation of EU Treaty commitments that EU institutions “conduct their work as openly as possible”.

NOVIS appealed the refusal to the Board of Appeal of the European Supervisory Authorities (BoA).  The Board concluded that in the case of two of the nine documents it identified as relevant “EIOPA’s interpretation of the public access exceptions and of the obligation of professional secrecy were too wide”.

In the case of the other documents, the BoA found that while “there may well be good reason to refuse access” it is a matter for EIOPA to “examine to what extent partial access should have been granted”

On the basis of these considerations, the Board decided to allow the appeal and returned the case to EIOPA “for the adoption of an amended decision”. EIOPA has still to respond to this.
 

Preaching Openness but not Practicing it

EU commitments to openness and transparency are directly challenged by EIOPA’s approach in the Euroins and NOVIS cases. Both cases highlight a striking unwillingness by a significant EU agency to operate with anything approaching transparency.

In both cases, EIOPA has been allowed to shield significant decisions from public scrutiny and objective public analysis.  The companies directly impacted by the decisions taken were denied access to the analysis that supported executive decisions in a way that is hard to imagine being tolerated by a national agency in an EU Member State.

In the Euroins case not only was EIOPA allowed to operate with a stunning lack of transparency, but the EU Commission went to extraordinary lengths to frustrate MEPs’ efforts to bring some clarity to the case.    

Both cases point to an urgent need to review how EIOPA has been allowed to effectively self-determine the principles on which it operates without any effective scrutiny.   
 

Dick Roche is a former Irish Minister for European Affairs and former Minister for the Environment.

[1] Intriguingly the non-redacted version of June 2023 BoD report that was initially uploaded to the internet was subsequently replaced by a version of the report in which paragraph 12 and a significant part of paragraph 14 were redacted.

https://www.eureporter.co/politics/european-commission/2024/08/30/eu-agency-that-ignores-eu-treaty/

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