EIOPA Guidelines on Identifying Critical Insurance Functions

The European Insurance and Occupational Pensions Authority (EIOPA) has issued final guidelines establishing criteria for identifying critical functions within insurance and reinsurance companies. These functions are defined as those whose disruption could lead to severe negative consequences for policyholders, beneficiaries, the broader economy, and financial stability. The publication of these guidelines is a direct requirement of the Insurance Recovery and Resolution Directive (IRRD), which mandates resolution authorities to develop resolution plans for insurers identified as performing such critical functions.

These guidelines will require insurers to assess their operations against the defined criteria to determine if they perform critical functions. Resolution authorities will use this assessment to inform their resolution planning. While the guidelines themselves are non-binding, the underlying IRRD imposes obligations on resolution authorities, indirectly necessitating compliance from insurers. Regulated entities should review these criteria to understand their potential classification and prepare for any implications related to resolution planning requirements.