Transparency in insurance regulation and supervisory law

Abstract

The role of transparency in insurance is overall important, i.e. not only in relation to the insurance contract law but also in relation to the insurance regulation and supervisory laws of each jurisdiction. In addition to being important, transparency in insurance regulation and supervisory laws is essential as the various regulatory and supervising authorities act as “gatekeepers” in ensuring the lawful operations of insurers to the benefit of the policyholders and of other insurance stakeholders. The current work is the second of two parts of an edited and comparative work, which is looking into the topic of transparency in insurance law and regulation in various common law and civil/continental law jurisdictions. This book, following from Volume I—whereby transparency in insurance contract law in the major common law and civil/continental law jurisdictions was discussed—describes, discusses and critically analyses transparency in insurance regulation in the various common law and civil/continental law jurisdictions, in Europe and in the rest of the world. The jurisdictions selected form some of the major players worldwide in insurance law and in the insurance market. As with Volume I, it has been felt that identifying and critically discussing transparency in insurance regulation and supervisory laws of the countries examined would help better assess the contemporary challenges imposed in the various legal systems. The study and analysis have allowed us to conclude that while the European jurisdictions reflect different facets of the principle as emerging from EU law on insurance, the principle has developed quite differently in other jurisdictions. In Europe, the Solvency II Directive and the Insurance Distribution Directive (IDD) introduced harmonised rules across the European Union. The Solvency II and IDD Directives alongside with the national regulatory and supervisory laws in the EU Member States act as guarantee for the observance of transparency, as demonstrated by the analysis carried out in this book. The different harmonisation levels found in the protection level offered by the above Directives, i.e. at times maximum and at times minimum harmonisation levels, depict the differences in the transposition of the principle of transparency in these Member States. In addition, the EU standards on transparency in insurance supervision act as a benchmark for national regulations. It follows that these standards help achieve the focal objective of insurance and reinsurance regulation and supervision at EU level, i.e. help the policyholders and beneficiaries to get adequate protection, and in effect their enactment is instrumental in achieving the goal of establishing a homogenous EU single market. In relation to transparency in insurance regulation and supervisory law of the countries outside the EU and Europe, i.e. countries grouped in this book under the heading “Rest of World”, it is observed that transparency is a much-needed principle and prerequisite in insurance regulation and supervisory law, where it helps the homogeneity of practices pertaining to the abidance of good faith. The framework of insurance regulation and its transparency issues in the national legal systems of Australia, Brazil, Chile, China, New Zealand, Peru, Russia, South Africa, Taiwan, Turkey and the USA allows us to conclude that, in the jurisdictions examined, such regulation exists in order to enhance transparency and promote financial soundness, good market conduct and to protect the interests of the insurer and of the policyholders. At the same time, it is notable that transparency should not lead to overregulation which might hinder the further development of the market. The final remark is that transparency in insurance regulation is important for consumers and insurers, and it is within this ambit that regulators should enhance the provision of the duty for transparency via the obligation of disclosure of information. Hence, it is apparent that in all jurisdictions transparency is not only important for consumers but also for insurers.