Insurance Committee Communication

Today is an important day in the EU’s regulatory agenda with the publication of two pieces of draft legislation intended to implement the remaining elements of the Basel Accord on Banking regulatory capital: the Capital Requirements Regulation (CRR3) and the Capital Requirements Directive (CRD6).

ITFA has been following the preparatory work of the European Commission and European Banking Authority for this legislation with great interest and is engaged in ongoing dialogue where necessary with stakeholders in the interests of the trade finance community.

ITFA is in particular pleased that the proposal for the CRR3 explicitly introduces a new Article 495d that mandates the European Banking Authority to analyse the eligibility and the use of credit insurance as a credit risk mitigation technique for the banking sector. Such insurance-based risk mitigation lies at the heart of the activities of ITFA’s members and recognises the growing importance and sophistication of the way banks and insurers work together to reduce credit risk. Based on the upcoming assessment the European Commission would be mandated to adopt the appropriate changes to the regulatory framework under the CRR.

ITFA looks forward to working closely with the European Banking Authority and the European Commission and fully cooperate on this important work.

In addition, ITFA has pushed for the European Insurance and Occupational Pensions Authority (EIOPA) to become fully involved in this evaluation and that the overall assessment could be completed efficiently so as to allow the European Commission to adopt the necessary adjustments to the CRR in a timely fashion.

Recognising insurance protection for credit risk as a risk mitigation technique under the CRR would help unlock much needed potential in Europe for activities such as trade finance and infrastructure investments.