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Cross-Border Insurance in Europe: Challenges for Supervision

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Abstract

At the start of Solvency II in January 2016, there is no overview of the insurance market in Europe. This paper develops a methodology to link various data sets on foreign branches and subsidiaries. The result is a new and comprehensive data set of cross-border insurance in Europe. We find that cross-border business in insurance is higher than in banking. We also find that the share of cross-border insurance has increased over the last decade, notwithstanding the global financial crisis. EIOPA, the European supervisory authority, plays a coordinating role among the national supervisors in the approval of internal models under Solvency II. Game theory suggests that there are limits to the coordination model. The increasing share of cross-border insurance, documented in this paper, may tilt the supervisory balance from coordination towards centralisation in an Insurance Union.

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Notes

  1. Stoyanova and Gründl (2014).

  2. Berger et al. (1999).

  3. Starita and Malafronte (2014).

  4. Moshirian (2012).

  5. The Helsinki list and U.S. list data are confidential. We use data aggregated at country level, which cannot be related to individual insurance groups.

  6. For example, van der Zwet (2003); Schoenmaker et al. (2008).

  7. van der Zwet (2003); Focarelli and Pozzolo (2008).

  8. Cerutti and Schmieder (2014).

  9. Sironi (2002).

  10. Claessens et al. (2010); Schoenmaker (2011).

  11. Weiss and Mühlnickel (2014).

  12. see Moshirian (2006), for an overview.

  13. De Nicoló et al. (2004).

  14. Claessens and van Horen (2014).

  15. Schoenmaker (2013).

  16. For example, Geringer et al. (1989).

  17. Sullivan (1994).

  18. Gulamhussen et al. (2014).

  19. Ramaswamy et al. (1996).

  20. Eppink and van Rhijn (1988).

  21. van der Zwet (2003).

  22. Schoenmaker and Sass (2014).

  23. European Commission (2014).

  24. Focarelli and Pozzolo (2008).

  25. Schoenmaker et al. (2008).

  26. EY (2014).

  27. Lloyds (2012).

  28. Schoenmaker (2011).

  29. European Commission (2010).

  30. IAIS (2013).

  31. Claessens et al. (2010).

  32. Cerutti and Schmieder (2014).

  33. Claessens et al. (2010).

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Acknowledgements

Part of this research was done at EIOPA in Frankfurt. Jan Sass was at Duisenberg School of Finance at which he conducted this research and is now consultant at Oliver Wyman. The authors would like to thank Sandra Desson and her team for their support and aid during this research. The paper reflects the opinions of the authors and not necessarily those of EIOPA. The authors would also like to thank two anonymous referees for valuable comments and suggestions.

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Authors and Affiliations

  1. Department of Finance, Rotterdam School of Management, Erasmus University, Burgemeester Oudlaan 50, 3062 PA, Rotterdam, The Netherlands

    Dirk Schoenmaker

  2. Oliver Wyman, Fred. Roeskestraat 97E, Amsterdam, 1076 EC, The Netherlands

    Jan Sass

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  1. Dirk Schoenmaker
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  2. Jan Sass
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Schoenmaker, D., Sass, J. Cross-Border Insurance in Europe: Challenges for Supervision. Geneva Pap Risk Insur Issues Pract 41, 351–377 (2016). https://doi.org/10.1057/gpp.2015.35

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