Governance and risk management Guideline 27 - General governance requirements The host supervisory authority should ensure that the third-country insurance undertaking complies with the system of governance requirements under Articles 41 to 50 of Directive 2009/138/EC, including with the prudent person principle with regard to branch operations. Generally all requirements concerning the system of governance apply to the branch of the third-country insurance undertaking which in many respects is treated like a separate undertaking. However, the fact that from the point of view of the third-country insurance undertaking the branch operations are part of the undertaking’s operations and not treated as if the branch were a separate entity, has to be taken into account. The third-country insurance undertaking has to provide an effective system of governance for the branch operations which ensures the sound and prudent management of the branch operations and is proportionate to its nature, scale and complexity. It has to comply with all requirements concerning organisational structure, allocation and separation of responsibilities, written policies, continuity plans, remuneration requirements and all specific governance requirements as set out in Articles 42 and 44 to 49 of Directive 2009/138/EC and relevant provisions of the Commission Delegated Regulation (EU) 2015/35, concerning these articles. These guidelines avoid undue costs being imposed on branches by permitting governance and key functions to be exercised from the head office or from the branch. If exercised from the head office then those functions will be subject to the home supervisory authority’s rules and where those rules comply with international standards similar results will be achieved without any material additional cost. Only if the home jurisdiction is not equivalent or does not adopt internationally agreed standards will additional costs be incurred. Guideline 29 – Language and reporting of governance policies The host supervisory authority should ensure that the third-country insurance undertaking has written policies covering the governance arrangements to comply with Guideline 7, available in a language agreed by the host supervisory authority, and include information in its regular supervisory reporting regarding how it satisfies those governance requirements. Generally, the requirements only apply with regard to branch operations. The third-country insurance undertaking can however demonstrate compliance with requirements also by meeting those requirements at the level of the undertaking, e.g. by establishing key functions for the undertaking including the branch or implementing a risk management or internal control system for the undertaking which covers the branch operations. In case of non-compliance with the governance requirements where the insurance undertaking does not apply requirements to the branch
Governance and risk management Guideline 27 - General governance requirements The host supervisory authority should ensure that the third-country insurance undertaking complies with the system of governance requirements under Articles 41 to 50 of Directive 2009/138/EC, including with the prudent person principle with regard to branch operations. Generally all requirements concerning the system of governance apply to the branch of the third-country insurance undertaking which in many respects is treated like a separate undertaking. However, the fact that from the point of view of the third-country insurance undertaking the branch operations are part of the undertaking’s operations and not treated as if the branch were a separate entity, has to be taken into account. The third-country insurance undertaking has to provide an effective system of governance for the branch operations which ensures the sound and prudent management of the branch operations and is proportionate to its nature, scale and complexity. It has to comply with all requirements concerning organisational structure, allocation and separation of responsibilities, written policies, continuity plans, remuneration requirements and all specific governance requirements as set out in Articles 42 and 44 to 49 of Directive 2009/138/EC and relevant provisions of the Commission Delegated Regulation (EU) 2015/35, concerning these articles. These guidelines avoid undue costs being imposed on branches by permitting governance and key functions to be exercised from the head office or from the branch. If exercised from the head office then those functions will be subject to the home supervisory authority’s rules and where those rules comply with international standards similar results will be achieved without any material additional cost. Only if the home jurisdiction is not equivalent or does not adopt internationally agreed standards will additional costs be incurred. Guideline 29 – Language and reporting of governance policies The host supervisory authority should ensure that the third-country insurance undertaking has written policies covering the governance arrangements to comply with Guideline 7, available in a language agreed by the host supervisory authority, and include information in its regular supervisory reporting regarding how it satisfies those governance requirements. Generally, the requirements only apply with regard to branch operations. The third-country insurance undertaking can however demonstrate compliance with requirements also by meeting those requirements at the level of the undertaking, e.g. by establishing key functions for the undertaking including the branch or implementing a risk management or internal control system for the undertaking which covers the branch operations. In case of non-compliance with the governance requirements where the insurance undertaking does not apply requirements to the branch
Final%20Report%20on%20the%20public%20consulation%20CP-14-048%20Guidelines%20on%20third%20country%20branches.docx