Corporate Governance of Insurance Firms After Solvency II

  • Michele Siri


Under Solvency II, corporate governance requirements are a complementary, but nonetheless essential, element to build a sound regulatory framework for insurance undertakings and also to address risks not specifically mitigated by the sole solvency capital requirements. After recalling the provisions of the second pillar concerning the system of governance, the chapter is devoted to highlighting the emerging regulatory trends in the corporate governance of insurance firms. Among others, it signals the exceptional extension of the duties and responsibilities assigned to the Board of Directors, far beyond the traditional role of both monitoring the chief executive officer and assessing the overall direction and strategy of the business. However, a better risk governance is not necessarily built on narrow rule-based approaches to corporate governance.


Insurance Corporate governance Board of directors Culture Risk management Internal controls Principle of proportionality Regulation EIOPA - European Insurance and Occupational Pensions Authority  ORSA - Own Self Risk Assessment Solvency Guidelines 


  1. Armour, J., Awrey, D., Davies, P. L., Enriques, L., Gordon J. N., Mayer C., et al. (2016, June). Bank governance. ECGI Working Paper No. 316/2016. Retrieved from
  2. Arndorfer, I., & Minto, A. (2015). The “four lines of defence model” for financial institutions (p. 3). Occasional Paper No. 11, BIS Financial Stability Institute. Retrieved from
  3. Bailey, A. (2015, November 3). Governance and the role of boards. Speech by Andrew Bailey at Westminster Business Forum, London. Retrieved from
  4. Basel Committee on Banking Supervision. (2010). Principles for enhancing corporate governance. Retrieved from
  5. Beltratti, A., & Stulz, R. M. (2012). Why did some banks perform better during the credit crisis? A cross-country study of the impact of governance and regulation. Journal of Financial Economics, 105, 1.CrossRefGoogle Scholar
  6. Bernardino, G. (2015, June 4). Insurance distribution in a challenging environment (p. 7). Speech at the European Federation of Insurance Intermediaries (BIPAR), Brussels. Retrieved from
  7. Boubakri, N. (2011). Corporate governance and issues from the insurance industry. Journal of Risk and Insurance, 78(3), 501.Google Scholar
  8. Busch, D. (2017). Product governance and product intervention under MiFID II/MiFIR. In D. Busch & G. Ferrarini (Eds.), Regulation of the EU financial markets: MiFID II and MiFIR. Oxford: Oxford University Press. Chap. 5.Google Scholar
  9. CEIOPS. (2008, May). Advice to the European Commission on the principle of proportionality in the Solvency II framework directive proposal. CEIOPS-DOC-24/08. Retrieved from
  10. CEIOPS. (2009, October). Advice for Level 2 implementing measures on Solvency II: System of governance (Former Consultation Paper 33, p. 3). Retrieved from
  11. Cheffins, B. (2015). The corporate governance movement, banks and the financial crisis. Theoretical Inquiries in Law, 16(1), 1.CrossRefGoogle Scholar
  12. Citlau, R. D., & Mülbert, P. O. (2011). The uncertain role of banks’ corporate governance in systemic risk regulation. ECGI Law Working Paper No. 179. Retrieved from
  13. Clarke, S., & Phelan, E. (2015, August). Stepping stones to ORSA: Looking beyond the preparatory phase of Solvency II. Milliman Research Report. Retrieved from
  14. Colaert, V. (2017). Mifid II in relation to other investor protection regulation: Picking up the crumbs of a piecemeal approach. In D. Busch & G. Ferrarini (Eds.), Regulation of the EU financial markets: MiFID II and MiFIR. Oxford: Oxford University Press. Chap. 21.Google Scholar
  15. Conference of Insurance Supervisory Services of the Member States of the European Union. (2002). Prudential supervision of insurance undertakings. Report prepared under chairmanship of Paul Sharma.
  16. de Jager, C. E. (2017). A question of trust: The pursuit of consumer trust in the financial sector by means of EU legislation. Journal of Consumer Policy, 40, 25, at p. 24.Google Scholar
  17. de Larosière High Level Group. (2009, February 25). Report on the future of financial supervision in the EU. Brussels.Google Scholar
  18. De Nederlandsche Bank. (2015, November). Supervision of behaviour and culture foundations, practice & future developments (p. 108). Retrieved from
  19. Dreher, M. (2015). Treatise on Solvency II. Berlin: Springer.CrossRefGoogle Scholar
  20. EBA. (2016, October 28). Draft guidelines on internal governance. Consultation Paper. Retrieved from
  21. EIOPA. Final report on Public Consultation No. 14/017 on guidelines on system of governance. Retrieved from
  22. EIOPA. (2015a, January 28). Guidelines on own risk and solvency assessment. Retrieved from
  23. EIOPA. (2015b, January 28). Guidelines on system of governance. EIOPA-BoS-14/253. Retrieved from
  24. EIOPA. (2015c, October 30). Consultation Paper on the proposal for preparatory guidelines on product oversight and governance arrangements by insurance undertakings and insurance distributors. EIOPA-CP-15/008. Retrieved from
  25. EIOPA. (2016a, January 11). Strategy towards a comprehensive risk-based and preventive framework for conduct of business supervision. Retrieved from
  26. EIOPA. (2016b, April 6). Final Report on Public Consultation on preparatory guidelines on product oversight and governance arrangements by insurance undertakings and insurance distributors. Retrieved from
  27. EIOPA. (2017, February 1). Technical advice on possible delegated acts concerning the insurance distribution directive (p. 14). Retrieved from
  28. Enriques, L., & Zetsche, D. (2015). Quack corporate governance, round III? Bank Board Regulation under the New European Capital Requirement Directive. Theoretical Inquiries in Law, 16(1), 211, at 240.Google Scholar
  29. Erhard, W., & Jensen, M. Putting integrity into finance: A purely positive approach. ECGI finance working paper, last rev. 2015, 417, Appendix 1. Retrieved from
  30. ESA. (2016, September 7). Joint Committee Report on risks and vulnerabilities in the Eu financial system. Retrieved from
  31. ESA 3L3 Task Force on Internal Governance. (2009, October). Cross-sectoral stock-take and analysis of internal governance requirements. Retrieved from
  32. ESMA–EBA. (2016, October 28). Joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU. Consultation Paper. Retrieved from
  33. European Central Bank. (2016, June). SSM supervisory statement on governance and risk appetite (p. 2). Retrieved from
  34. European Commission. Green paper, corporate governance in financial institutions and remuneration policies, COM (2010), 284 final. Retrieved from
  35. European Systemic Risk Board. (2015, June). Report on misconduct risk in the banking sector. Retrieved from
  36. Ferrarini, G. (2017). Understanding the role of corporate governance in financial institutions: A research agenda. Law working paper no. 347. Retrieved from
  37. Financial Services Authority. (2011, December). The failure of the Royal Bank of Scotland (p. 228). Retrieved from
  38. Financial Stability Board. (2013). Thematic review on risk governance. Retrieved from
  39. Financial Stability Board. (2014, April). Guidance on supervisory interaction with financial institutions on risk culture. Retrieved from
  40. G20/OECD. (2015). Principles of corporate governance. Retrieved from
  41. Group of Thirty. (2015, July). Banking conduct and culture: A call for sustained and comprehensive reform. Retrieved from
  42. Guccione, A. V. (2017). From solvency to omnibus. Historical origins and normative evolution. In M. Andenas, R. G. Avesani, P. Manes, F. Vella, & P. R. Wood (Eds.), Solvency II: A dynamic challenge for the insurance market (p. 35). Bologna: Il Mulino. Chap. I.Google Scholar
  43. Hilb, M. (2011). Redesigning corporate governance: Lessons learnt from the global financial crisis. Journal of Management and Governance, 15(4), 533.CrossRefGoogle Scholar
  44. Hopt, K. (2013). Corporate governance of banks and other financial institutions after the financial crisis. Journal of Corporate Law Studies, 13, 237.CrossRefGoogle Scholar
  45. IAIS. (2015, June 17). Draft issues paper on conduct of business risk and its management (p. 15). Retrieved from
  46. Kirkpatrick, G. (2009). The corporate governance lessons from the financial crisis. Financial Market Trends, 3(1). Retrieved from
  47. KPMG. (2002, May). Study into the methodologies to assess the overall financial position of an insurance undertaking from the perspective of prudential supervision. Retrieved from
  48. Lavelle, D., O’Donnell, A., Pender, D., Roberts, D., & Tulloch, D. (2010, November). The Solvency II ORSA process. Society of Actuaries, Ireland. Retrieved from
  49. Levine, R. (2004). The corporate governance of banks: A concise discussion of concepts and evidence. World Bank Policy Research Working Paper No. 3404. Retrieved from
  50. Macneil, I. (2012). Governance and regulation: Resetting the relationship. Law and Financial Markets Review, 6(3), 169.CrossRefGoogle Scholar
  51. Manes, P. (2017). Corporate governance, the approach to risk and the insurance industry under Solvency II. In M. Andenas, R. G. Avesani, P. Manes, F. Vella, & P. R. Wood (Eds.), Solvency II: A dynamic challenge for the insurance market (p. 93). Bologna: Il Mulino. Chap. IV.Google Scholar
  52. Marano, P. The “Mifidization”: The sunset of life insurance in the EU regulation on insurance? Retrieved from
  53. Marchetti, P., Siciliano, G., & Ventoruzzo, M. (2016, October). Dissenting directors. ECGI Working Paper No. 332/2016. Retrieved from
  54. Moloney, N. (2014). EU securities and financial markets regulation, (p. 357), Oxford: Oxford University Press.Google Scholar
  55. Moschella, M., & Tsingou, E. (2013). Regulating finance after the crisis: Unveiling the different dynamics of the regulatory process. Regulation and Governance, 7, 407.CrossRefGoogle Scholar
  56. Mülbert, P. O. (2008). Corporate governance of banks. European Business Organisation Law Review, 11(3), 427.Google Scholar
  57. OECD Steering Committee on Corporate Governance. Corporate governance and the financial crisis. Retrieved from
  58. Pi, L., & Timme, S. G. (1993). Corporate control and bank efficiency. Journal of Bank and Finance, 17(2–3), 515.CrossRefGoogle Scholar
  59. Redmond, L. (2014). Risk culture: A view from the board. In P. Jackson (Ed.), Risk culture and effective risk governance (p. 47). London: Risk Books. Chap. 3.Google Scholar
  60. Ricci, O. (2014). Corporate governance in the European insurance industry. Berlin: Springer.CrossRefGoogle Scholar
  61. Rixen, T. (2013). Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition. Regulation and Governance, 7, 435.CrossRefGoogle Scholar
  62. Sants, H. (2012, April). Delivering effective corporate governance: The financial regulators role. Speech by Hector Sants, Chief Executive, FSA at Merchant Taylors’ Hall. Retrieved from
  63. Sheedy, E., & Griffin, B. (2017). Risk governance, structures, culture, and behavior: A view from the inside. Corporate Governance: An International Review. doi: 10.1111/corg.12200.
  64. Swain, R., & Swallow, D. (2015). The prudential regulation of insurers under Solvency II (p. 145). Bank of England, Quarterly Bulletin Q2. Retrieved from
  65. van der Ende, J., & Ayadi, R. (2006). Insurance regulation and supervision in the EU: Report of a CEPS Task Force. Brussels.Google Scholar
  66. Van Hulle, K. (2008). The challenge of Solvency II: Lecture to the faculty of actuaries. British Actuarial Journal, 14(1), 27.Google Scholar
  67. Winter, J. (2012). The financial crisis: Does good corporate governance matter and how to achieve it? In E. Wymeersch, K. J. Hopt, & G. Ferrarini (Eds.), Financial Regulation and Supervision. A post-crisis analysis (para. 12), Oxford: Oxford University Press.Google Scholar
  68. Wright, S., Sheedy, E., & Magee, S. (2016). International compliance with new Basel Accord principles for risk governance. Accounting and Finance. Retrieved from doi: 10.1111/acfi.12213.

Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Michele Siri
    • 1
  1. 1.Department of LawUniversity of GenoaGenovaItaly

Personalised recommendations