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

that set and enforce standards for professional conduct. See Annex A
which proposes a possible framework for <strong>the</strong> actuarial function.
16.35 In principle, <strong>the</strong> requirements should apply <strong>to</strong> all insurance
undertakings, although <strong>the</strong>y should be assessed with a reference <strong>to</strong>
<strong>the</strong> nature and <strong>the</strong> size of <strong>the</strong> business (principle of proportionality).
Definition
16.36 CEIOPS understands 'fit and proper' in a narrow sense as follows:
Technical qualification and/or personal vocational experience (fit)
16.37 This means that <strong>the</strong> qualifications, knowledge and experience of <strong>the</strong>
person subject <strong>to</strong> <strong>the</strong> fitness requirements should be sufficient and
adequate <strong>to</strong> enable sound and prudent management and decisionmaking
at <strong>the</strong> insurer.
16.38 The knowledge and experience required depends on <strong>the</strong> position and
responsibility of <strong>the</strong> functionary within <strong>the</strong> insurer.
Reliability and respectability (proper)
16.39 The past and present attitudes, conduct and actions of <strong>the</strong> person
who is subject <strong>to</strong> <strong>the</strong> propriety requirements should be such that his
integrity is beyond reasonable doubt. Indica<strong>to</strong>rs of an individual’s
level of integrity can be of criminal, financial, supervisory or of any
o<strong>the</strong>r nature.
16.40 Fit and proper in <strong>the</strong> widest sense also includes requirements on <strong>the</strong>
compatibility of <strong>the</strong> targeted function with already existing functions,
on <strong>the</strong> place of residence, on a minimum number of years of
professional experience and on <strong>the</strong> sufficient proficiency in <strong>the</strong>
national language/s of <strong>the</strong> undertaking’s main centre of operations, or
in any o<strong>the</strong>r languages accepted by <strong>the</strong> responsible supervisory
authority, as well as being able <strong>to</strong> communicate sufficiently well
through o<strong>the</strong>r means. Fur<strong>the</strong>rmore CEIOPS proposes that <strong>the</strong>re are a
number of different ways of reducing this risk of a dominant CEO or
chairman. 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 which provide a more immediate and effective
check on <strong>the</strong> dominance of an individual. There may be some
situations where exceptions <strong>to</strong> this could be admitted, e.g. in <strong>the</strong> case
of small, captive, or specialised insurers.
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