ITFA regulatory update | News flash

This is the first of a series of news flashes we will send you regularly to keep you abreast of important developments on the regulatory front.

• As most of you will know, the ITFA Insurance Committee, chaired by Silja Calac, comprises a number of sub-committees, one of which deals with regulatory affairs.
• Through that committee made up of insurers, brokers and banks, ITFA has been leading the charge for a better capital treatment of credit insurance under the new Basel 4 regulations.
• ITFA took the step early on to hire the services of a professional lobbyist in Brussels in order to navigate the complex legislative process in Europe.
• A first major victory was achieved back in October when the draft CRR (Capital Requirements Regulations) was published by the European Commission. The new CRR is the transposition of the Basel accords into European legislation.
• For the first time, credit insurance was mentioned in an article (article 506) and the EBA (European Banking Authority) was mandated to produce a full report on it as well as recommendations as to the appropriate LGD (Loss Given Default) for credit insurance. Hopefully, it is lower than the proposed 45% level.
• The committee then focused on a number of amendments to that article, most importantly a transition arrangement to ensure that the industry has some time to adapt to whichever new level is recommended.
• Thanks to targeted meetings with Members of the European Parliament (MEPs) and Member States, we can now report that we have struck a second victory:
  • 4 MEPs have supported our proposals to involve EIOPA (the European Insurance and Occupational Pensions Authority) in the report. EIOPA is the sister agency of the EBA in charge of regulating insurers.
  • 2 MEPs have supported our proposals for transitions lasting until 2028 where the LGD would be significantly lower than the proposed level.
  • 6 MEPs have pushed for the report to be produced sooner than end of 2026, the original proposal from the Commission.
• We will not know if fully successful until a vote in December but the fact that such amendments were submitted bodes well for our advocacy efforts.

We will continue to update you on progress and we thank those ITFA members (and non-members as well as fellow trade associations) who have supported and contributed to the funding of these important activities.