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

appoint an additional person <strong>to</strong> <strong>the</strong> function or <strong>to</strong> change a person
exercising <strong>the</strong> function.
16.21 Fur<strong>the</strong>rmore, <strong>the</strong> supervisory assessment should not end after a person
has been approved. Supervisors need <strong>to</strong> remain alert <strong>to</strong> any
information that could alter <strong>the</strong>ir assessment. A single event may result
in a person no longer being considered fit and proper. Supervisory
authorities should also consider <strong>the</strong> overall picture; individual
'instances' which would not be sufficient <strong>to</strong> dispute a person’s suitability
or reliability, however, <strong>the</strong> occurrence of a number of <strong>the</strong>m may
<strong>to</strong>ge<strong>the</strong>r indicate unsuitability. CEIOPS recognises that in some Member
States a disqualification can arise only from formal and prescribed
failures or events, as prescribed in legislation.
16.22 The degree of incompatibility between <strong>the</strong> position of a manager in an
insurance undertaking and o<strong>the</strong>r activities is an important criterion for
judging whe<strong>the</strong>r a specific person can be appointed as a manager. The
decisive fac<strong>to</strong>r is whe<strong>the</strong>r <strong>the</strong> o<strong>the</strong>r activity might conflict with <strong>the</strong>
interests of <strong>the</strong> insurance undertaking and/or policyholders. An activity
as an insurance broker is a prime example.
16.23 Modern information technology enables people <strong>to</strong> conduct a large
proportion of <strong>the</strong>ir business duties from virtually anywhere without
actually having <strong>to</strong> enter <strong>the</strong>ir offices. Never<strong>the</strong>less, if a manager’s place
of residence is a considerable distance from his office, steps have <strong>to</strong> be
taken <strong>to</strong> ensure sound and prudent management at <strong>the</strong> insurance
undertaking.
16.24 In order <strong>to</strong> avoid <strong>the</strong> problem of a dominant CEO or Chairman who
operates in isolation, CEIOPS proposes that <strong>the</strong>re are a number of
different ways of reducing this risk. The utilisation of <strong>the</strong> ‘four eye
principle’ that is <strong>to</strong> say, that at least a minimum of two persons are
actually managing <strong>the</strong> company, is one way in addressing this problem.
O<strong>the</strong>r alternatives are that undertakings must have strong internal
controls, a governance structure which supports a collegiate decision
making process, active board participation and independent and
challenging audit arrangements provide a more immediate and
effective check on <strong>the</strong> dominance of an individual. Article 6.1 of <strong>the</strong>
Directive 2000/12/EC 125 relating <strong>to</strong> <strong>the</strong> taking up and pursuit of <strong>the</strong>
business of credit institutions, for example, also dictates that
authorisation will only be granted if two executive direc<strong>to</strong>rs are
appointed. The discussion in CEIOPS underlined <strong>the</strong> importance of good
management in guarding against <strong>the</strong> collapse of companies. This
importance would not be adequately taken in<strong>to</strong> account if <strong>the</strong>
management of an undertaking were entrusted <strong>to</strong> a single person who
would thus not be obliged <strong>to</strong> coordinate planned decisions or <strong>to</strong> take
<strong>the</strong> opinion of ano<strong>the</strong>r person in<strong>to</strong> account. In <strong>the</strong> past, it has not been
possible <strong>to</strong> agree on a common minimum number. There may be some
particular situations where exceptions could possibly be admitted, e.g.
in <strong>the</strong> case of small, captive, or specialised insurers.
125 As amended by Directive 2000/28/EC
187