FRANKFURT (Reuters) - The European Union's insurance watchdog on Wednesday called for harmonized insurance guarantee schemes, saying that they can contribute to protecting policyholders and beneficiaries.
Guarantees provide protection to consumers when insurers are unable to fulfill their commitments.
Gabriel Bernardino, chairman of the European Insurance and Occupational Authority (EIOPA), said that current guarantees in the bloc differ "substantially" in financing, functions, mandate and coverage.
"This fragmentation creates particular problems in the presence of failures involving cross-border business," Bernardino told a conference of insurance regulators.
He said that the insurance watchdog was beginning to study the topic and would issue a policy paper for discussion in 2018.
Earlier this year, EIOPA called for a harmonized scheme to deal with failing insurers, an effort Bernardino underscored on Wednesday.
"European action is required," Bernardino said.
The EIOPA chief also addressed Britain's decision to leave the European Union, urging companies to prepare for a "cliff edge" Brexit scenario.
"I believe that it is now more than crucial that all insurance groups properly assess the risks of a 'cliff edge' scenario to their business and consider all possible solutions to mitigate them under the available regulatory framework," he said.