Answers to the European Commission on the ... - Eiopa - Europa

- Governance
corrective and ultimate measures once <strong>the</strong> preventive and corrective
measures have been performed, if <strong>the</strong> interests of policyholders are
still compromised.
14.39 Supervisory authorities should have effective powers <strong>to</strong> address
management problems, including limiting <strong>the</strong> power of controlling
owners, Board of Direc<strong>to</strong>rs, and Senior Management, demanding <strong>the</strong>ir
replacement or having <strong>the</strong>ir powers restricted (see fit and proper
powers), in situations where <strong>the</strong> governance of an undertaking is
considered <strong>to</strong> be demonstrably unsatisfac<strong>to</strong>ry for <strong>the</strong> prudent running
of <strong>the</strong> undertaking, regardless of <strong>the</strong> legal form.
14.40 Supervisory authorities should have <strong>the</strong> power <strong>to</strong> request that <strong>the</strong>
governance system, and <strong>the</strong> policies, strategies and procedures
relating <strong>to</strong> internal control and risk management systems be improved
and streng<strong>the</strong>ned.
14.41 In addition <strong>to</strong> <strong>the</strong> powers described above, supervisory authorities
should be able <strong>to</strong> simultaneously demand an increase in <strong>the</strong> solvency
capital requirement if it concludes that <strong>the</strong> existing governance
system, and <strong>the</strong> policies, strategies and procedures relating <strong>to</strong> internal
control and risk management increase <strong>the</strong> risk profile of <strong>the</strong>
undertaking.
14.42 With regard <strong>to</strong> fit and proper issues, supervisory authorities should
have <strong>the</strong> power <strong>to</strong>:
• prevent <strong>the</strong> appointment by <strong>the</strong> insurer of a particular individual
<strong>to</strong> a key function;
• suspend an individual from a key position, or withdraw <strong>the</strong>
approval of an individual <strong>to</strong> hold key positions, if concluded not
fit or proper by <strong>the</strong> supervisor, ei<strong>the</strong>r directly or by instructing
<strong>the</strong> insurer <strong>to</strong> take <strong>the</strong>se measures; 118
• require <strong>the</strong> insurer <strong>to</strong> appoint such individuals as are necessary
<strong>to</strong> streng<strong>the</strong>n key functions in order <strong>to</strong> ensure <strong>the</strong> sound and
proper management and control at <strong>the</strong> insurer;
• require <strong>the</strong> insurer <strong>to</strong> engage a person with appropriate
expertise and skills, nominated by <strong>the</strong> supervisor, <strong>to</strong> investigate
any aspect of <strong>the</strong> insurer’s affairs that may be of concern <strong>to</strong> <strong>the</strong>
supervisory authority and <strong>to</strong> prepare a corresponding report for
<strong>the</strong> supervisory authority. The insurer is <strong>to</strong> bear <strong>the</strong> cost of that
investigation and report;
• withdraw <strong>the</strong> license, especially in <strong>the</strong> case of a major breach
(ei<strong>the</strong>r in terms of <strong>the</strong> degree of <strong>the</strong> breach or of <strong>the</strong> number of
key functionaries involved) of fit and proper requirements.
118 A minority of CEIOPS’ members do not wish <strong>to</strong> see this requirement in <strong>the</strong> future framework.
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