EIOPA has submitted technical advice to the European Commission proposing minimum common standards for insurance guarantee schemes (IGS) across the EU, aiming to reduce current differences in policyholder protection in the event of an insurer's failure, the institution said on its website.

At present, national guarantee schemes vary considerably in terms of their existence, scope and coverage. EIOPA therefore recommends targeted harmonization while preserving flexibility for Member States to reflect national market specificities.

Among the main proposals, EIOPA recommends a common minimum scope of eligible life and non-life policies, focusing on products where insurer failure could cause the greatest financial hardship. It also proposes harmonized triggers for activating guarantee schemes, common deadlines for submitting claims and a maximum timeframe for compensation payments.

On financing, EIOPA proposes minimum requirements to ensure that guarantee schemes have adequate liquidity, while allowing individual countries to determine the most appropriate funding arrangements. IGS should also receive the same preferential ranking as insurance claims in national insolvency proceedings.

The advice also addresses the interaction with the Insurance Recovery and Resolution Directive (IRRD), recommending, at minimum, formal cooperation between national resolution authorities and insurance guarantee schemes.

EIOPA's advice is a preliminary step toward a potential European Commission legislative proposal. The Authority has previously advocated that every EU Member State should have a national IGS, adequately funded and operating according to a minimum set of harmonized requirements.

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