The Principle of Proportionality: Unraveling the Practical Application of Proportionality in the EU Regulations and the Solvency II Directive for Insurance Undertakings-Reference-Cited by-同舟云学术

The Principle of Proportionality: Unraveling the Practical Application of Proportionality in the EU Regulations and the Solvency II Directive for Insurance Undertakings

Published:2024-06-04 Issue:6 Volume:17 Page:233
ISSN:1911-8074
Container-title:Journal of Risk and Financial Management
language:en
Short-container-title:JRFM

Author:

Baldacchino Aaron¹^ORCID,Grima Simon¹²^ORCID,Sood Kiran³⁴⁵^ORCID

Affiliation:

1. Department of Insurance and Risk Management, Faculty of Economics, Management and Accountancy, University of Malta, MSD 2080 Msida, Malta

2. Faculty of Business, Management and Economics, University of Latvia, LV-1586 Riga, Latvia

3. Chitkara Business School, Chitkara University, Rajpura 140401, Punjab, India

4. Women Researchers Council (WRC), Azerbaijan State University of Economics (UNEC), Istiglaliyyat Street 6, AZ1001 Baku, Azerbaijan

5. Department of Finance and Banking, Faculty of Applied Sciences, University of Uşak, Uşak 64200, Turkey

Abstract

Proportionality, pivotal to EU regulations and Solvency II, tailors rules to insurers’ size and complexity. Inconsistent application by supervisory authorities (NSAs) necessitates clarity to prevent undue costs. This study examines the issue via a review of the literature and industry discussions, emphasizing Solvency II’s introduction of proportionality and the varied interpretations it evokes. Transparent communication is crucial, and regulatory evolution must align with market dynamics, with the European Insurance and Occupational Pensions Authority (EIOPA) fostering convergence. Assessing proportionality mandates a comprehensive evaluation of an insurer’s nature, scale, and complexity. Regulatory distinctions between first-party and third-party risks could enhance market efficiency. Ultimately, a holistic, market-oriented approach is essential for proportionate regulation in the insurance sector, requiring concerted efforts to elucidate frameworks, foster transparency, and align regulatory evolution with market dynamics.

Publisher

MDPI AG

Link

https://www.mdpi.com/1911-8074/17/6/233/pdf

Reference43 articles.

1. The leverage ratio, risk-taking and bank stability;Grill;Journal of Financial Stability,2020

2. AIM-Association of Insurance and Risk Managers in Industry and Commerce (2024, April 30). Position Paper Solvency II. Available online: https://www.aim-mutual.org/wp-content/uploads/2020/03/Position-Paper-Solvency-II_final_2.pdf.

3. Baldacchino, Aaron (2016). The Principle of Proportionality: A Critical Analysis of its Application in Solvency II: With Particular Reference to the Maltese Insurance and Captive Industry. [Unpublished Master’s thesis, Faculty of Laws, University of Malta]. Supervised by Dr. Marisa Attard.

4. Bernardino, Gabriel (2024, April 30). Gabriel Bernardino speech at the Hearing at the Economic and Monetary Affairs (ECON) Committee of the European Parliament, Brussels. Available online: https://www.eiopa.europa.eu/document/download/4b4f1688-f631-4f3f-b18b-b4c9b8a21757_en?filename=2015-09-14-hearing-at-the-econ-committee.pdf/.

5. Briffa, Josianne (2008). Shaping Up Ahead of Solvency II: Embedding the Concepts of Risk and Capital Management in Insurers. [Master’s thesis, University of Malta].