On April 24, 2013, the ICIR hosted the 4th Seminar on Insurance and Regulation. The ICIR had the honor to welcome Ms. Daniela Weber-Rey, LL.M. (Columbia University) as the guest speaker. Ms. Weber-Rey, who is admitted to the bar in Frankfurt and New York, was at the time of the lecture still a partner at the law firm Clifford Chance and will soon take over her new position as Chief Governance Officer and Deputy Global Head Compliance at Deutsche Bank. Against the background of the envisaged Solvency II Project, Ms. Weber-Rey gave a talk on the topic of “Corporate Governance, Key Functions and Interim Measures – A Call for Action”.

Ms. Weber-Rey began her talk by pointing out that ineffective corporate governance figures - according to the majority view at the EU Commission as well as in the Member States - amongst the key contributing factors in the current financial crisis and that the EU-Green paper on Corporate Governance in Financial Institutions has thus highlighted the importance of establishing a functioning system of corporate governance. From the perspective of Ms. Weber-Rey, the implementation of a corporate governance system should, first and foremost, be a question of creating the corresponding corporate culture and should not be a mere reflex to over-detailed, rigorous regulatory requirements. Pursuant to Ms. Weber-Rey any regulation on the governance system should, therefore, be principles-based in order to grant companies the necessary leeway to implement a governance system best suited to their concrete business model.

During her talk, Ms. Weber-Rey also pointed out possible conflicts arising from the fact that governance requirements laid down in regulatory law at the EU level and governance requirements laid down in the national corporate laws are not brought into line and run the risk of being inconsistent. The pressure on the financial sector as a consequence of the financial crisis leads to issues of corporate governance being developed under regulatory laws rather than being well thought through by corporate law makers. The new key functions and the fit and proper requirements created for them are a good example of this development.

In order to counter the problems created by the belated implementation of the Solvency II Project, EIOPA has opted to introduce late last year interim measures with the intent to better prepare insurance undertakings for the full application of the Solvency II regulatory system. Examples for such interim measures are the new guidelines from EIOPA on the System of Governance, which are currently in the preparatory phase. They will, however, allow national regulators to exceed the EU standards and set tougher rules on local insurers (so-called gold-plating). The possibility to set stricter rules, may create advantages (by improving awareness of risks and thus making insurance undertakings more competitive) or disadvantages (e.g. by raising costs) for the insurers which are subjected to them. Ms. Weber-Rey insofar acknowledges that the creation of a truly level playing-field, one of the main aims of Solvency II, is still far from becoming a reality.

Nonetheless she is fully supportive of the Preparatory Measures as recently put to consultation by EIOPA, as she agrees that it is of the essence to keep the momentum for a risk-based supervisory framework for the insurance sector, preparing undertakings for the considerable challenges lying ahead, while trying to harmonies the requirements established by EIOPA and the ECB as well as the Member States in the context of potential macro-economic risk emanating from the insurance sector. In particular, the Preparatory Measures created by EIOPA are an excellent example of the new European system of financial supervision at work, attempting to produce best results for the (insurance) industry even at times of political standstill.