EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 23 April 2010 
on private insurance supervision, the establishmen t of a private life insurance guarantee fund and 
other provisions 
(CON/2010/33) 
 
Introduction and legal basis  
On 1 March 2010 the European Central Bank (ECB) received a request from the Greek Ministry of 
Finance for an opinion on a draft law on private insura nce supervision, the establishment of a private life 
insurance guarantee fund and other provisi ons (hereinafter the ‘draft law’).  
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and sixth indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of  the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft law relates to the Bank of Greece and rules applicable 
to financial institutions insofar as they materially influence the stability of financial institutions and 
markets. In accordance with the firs t sentence of Article 17.5 of the Rules of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion. 
 1. Purpose of the draft law 
1.1 The draft law abolishes the Insurance Supervis ion Commission for Private Insurance (HPISC), 
established as an entity supervised by the Ministry of Finance
2, and transfers its competences3 to 
the Bank of Greece, thus placing the insurance sect or under the supervision of the Bank of Greece. 
Following the adoption of the draft law, the Ba nk of Greece will supervise credit and financial 
institutions and insurance companies, and the Hellenic Capital Market Commission (HCMC) will 
supervise investment firms. 
1.2 The draft law also establishes th e Private Life Insura nce Guarantee Fund (PLIGF) as a legal entity 
governed by private law and subject to the supervis ion and control of the Minister for Finance. The 
PLIGF will preserve and transfer all or part of the life insurance portfolios of insurance 
undertakings in liquidation to other insurance undert akings and, should this  not be feasible, the 
PLIGF will terminate the insurance policies and pa y compensation for the value of the said policies 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Under Law No 3229/2004 on the supervision of private insura nce, supervision and contro l of games of chance, the 
application of international accounting standa rds and other provisions, FEK A 38/10.2.2004. 
3  Article 1 of the draft law. 
2 and outstanding claims and payable benefits4. Moreover, the PLIGF will provide cover for 
insurance payments deriving from any life insuranc e policies entered into and operations carried 
out in Greece or other Member States or European Economic Area countries through a branch or through the free (cross-border) provision of services
5. Finally, from the date of declaring bankrupt 
or revoking the authorisation of an insurance undertaking, the PLIGF will be automatically subrogated to such insurance undertaking in respect  of all the rights and obligations deriving from 
such life insurance policies
6. 
1.3 Article 14 of the draft law establishes a Systemic St ability Council (SSC) at the Ministry of Finance 
to monitor the systemic  stability of the economy7. More specifically, the SSC will:  
(a) monitor the relationships and dynamics between  financial systems, with an emphasis on capital 
markets, the banking and insurance systems, liquidity, public debt and State guarantees, as well as on prudential action in extreme situations, instab ility and crises; (b) monitor and coordinate the 
Ministry of Finance’s financial policy on issues arising in the context of the operation of the 
European supervisory institutions; and (c) monitor and ensure the exchange of information between 
the Ministry of Finance and the financial sector’s supervisory authorities for the coordination of the 
Ministry’s financial policy. The SSC’s member s will comprise the Minister and the Deputy 
Minister for Finance, the Governor and one Deput y Governor of the Bank of Greece, the HCMC’s 
Chair and two persons of recognised standing with special knowledge of the financial sector, to be 
designated by the Minister for Finance. Th e Minister for Finance will chair the SSC. 
1.4 Finally, the draft law streamlines the legal fra mework governing credit cooperatives operating as 
credit institutions, while taking into account their special features
8.  
 2. General observations 
Article 127(5) of the Treaty provides that the European System of Central Banks (ESCB) 
contributes to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit ins titutions and the stability of the financial system. In this context, 
the ECB has stressed the importance of the nati onal central banks’ (NCBs) close involvement in 
prudential supervision
9, which may support their contribution to  the macro-prudential oversight of 
the financial sector. The financial crisis demons trates the need to strengthen supervision and 
regulation of the financial system as a whole. With  respect to the insurance sector in particular, 
experience has shown that insurance companies are important for systemic financial stability 
because of their size, their interconnectedness with  the financial sector and the economic function 
                                                 
4  Article 5(1) of the draft law. 
5  Article 5(2) of the draft law. 
6  Article 5(3) of the draft law. 
7  See also Article 14 in Chapter C of the explanatory memorandum to the draft law. 
8  See Article 16 of the draft law. According to the explanat ory memorandum to the draft law,  the amendments are intended 
to enable such cooperatives to raise increased amounts of capital and to finance their members. 
9 See ‘The role of central banks in prudential supervis ion’, ECB, 22.3.2001, available on the ECB’s website at 
www.ecb.europa.eu. 
3 of insurance. In view of the systemic relevan ce of the insurance sector for financial stability, 
insurance is part of the macro-prudential oversi ght to be exercised by the proposed European 
Systemic Risk Board (ESRB). Against this b ackground, the ECB welcomes the Bank of Greece’s 
future supervisory role for the insurance sector, as the new task s will enhance its contribution to 
safeguarding financial stability and preventing or miti gating systemic risks, also in the context of 
ESCB and ECB support to the ESRB which will be r esponsible for macroprudential supervision of 
the EU financial system as a whole.  
 3. Transfer of insurance sector supervisory competences to the Bank of Greece and related 
arrangements 
3.1 The ECB notes that the proposed transfer  of insurance sector supervisory  competences is in line 
with Article 55A of the Statute of the Bank of Greece which provides, inter alia , that categories of 
enterprises and organisations other than those currently provided for therein may also be brought 
under the Bank of Greece’s prudential supervision.  
3.2 Safeguards for central bank inde pendence and compliance with th e monetary financing prohibition  
The principle of central bank independence require s Member States to ensure that NCBs have 
sufficient financial resources to perform ESCB or  Eurosystem-related tasks as well as their own 
national tasks
10. In this respect, the new functions to be performed by the Bank of Greece should be 
conducted in a manner that is fully compatible w ith the Bank of Greece institutional and financial 
independence and consequently should not impede the proper pe rformance of its ESCB-related 
tasks. Also, Article 5A of the Statute of the Bank of Greece guarantees the independence of the 
Bank and of the members of its decision-making bodi es in respect of all tasks carried out by them, 
i.e. both ESCB-related and other tasks, which would include the supervision of insurance 
undertakings. To ensure that the proposed reform  guarantees the Bank of Greece’s institutional and 
financial independence and compliance with the monetary financing prohibition and that the 
solution is balanced, the ECB comments as follows.  
3.2.1 Transfer of the HPISC’s competences to the Bank of Greece  
 Under Article 1(1) of the draft law, all the HP ISC’s competences, which are listed non-exhaustively 
in Article 3(1) of Law 3229/2004, are transfe rred to the Bank of Greece, with the exceptions 
explicitly referred to in Article 1(1) of the draft law. To ensure legal certa inty in relation to the 
transfer of competences to the Bank of Greece, the ECB recommends that Article 1(1) of the draft law should state that, in addition to the transfer of the HPISC’s competence s to the Bank of Greece 
specified in the draft law, all other concurrent competences of other authorities relating to the 
supervision of the insurance sector under other na tional legislation are transferred. This would 
enable the Bank of Greece to carry out its new tasks without interference.  
                                                 
10  See ECB Convergence Report May 2008, p. 20. 
4 3.2.2 Devolution of the HPISC’s assets to the Greek State   
In order for the Bank of Greece to be able to perform its new supervisory tasks without being 
adversely affected in the performance of all its existing tasks, sufficient resources should be 
available to it. The draft law provides that the cap ital created through the contributions made by the 
insurance undertakings, as well as the HPISC’s remain ing property in terms of assets and liabilities, 
will devolve to the State11. The ECB therefore understands that, while the function of the insurance 
sector supervision previously entrusted to the HP ISC will be transferred to the Bank of Greece, 
assets that belonged to the HPISC will not be transfe rred. In this respect, it should be ensured that 
the Bank of Greece will not bear any financial cost s or liability related to any HPISC supervisory 
activities undertaken prior to the effective date of  transfer of responsibilities to the Bank of Greece. 
3.2.3  Pending legal proceedings 
Any provisions under which an NCB becomes the le gal successor to any liabilities of a distinct 
supervisory authority raise issues of compliance wi th the monetary financing prohibition provided 
for in Article 123 of the Treaty12. The draft law provides in this respect that pending legal 
proceedings relating to disputes or matters involving the abolished HPISC will be continued by the Bank of Greece without interruption. Any financia l consequences resulting from judicial decisions 
will ultimately be borne by the Greek State, wh ich may, where appropriate, intervene and assume 
the legal proceedings
13.The ECB understands that the draft law does not provide for any 
compensation for legal proceedings or disputes which may occur after the transfer of responsibilities to the Bank of Greece but originate in events occurring prior to this transfer. 
Moreover, the ECB understands that any judgm ent rendered by the Greek courts granting 
compensation to a holder of an insurance policy will imply that the compensation will be borne by 
Bank of Greece, which will only have subsequent recourse to th e Greek State for reimbursement. 
Accordingly, the Bank of Greece would acquire a claim against the Greek State.  This arrangement 
would be incompatible with Article 123 of the Treaty. The ECB therefore recommends specifying 
in the draft law that the Greek State will meet in  advance any financial obligations incurred by the 
Bank of Greece as a result of it being a legal successo r to a supervisory authority and that the State 
will not have any recourse to the Bank of Greec e in relation to its liability in this respect
14. 
In addition, as regards the principle of central bank independence, as previously mentioned by the 
ECB15, in order to ensure an NCB’s financial i ndependence, ‘Member States may not put their 
NCBs in a position where they have insuffici ent … resources to carry out their ESCB or 
Eurosystem-related tasks’. In this vein, the prop osed taking on of legal proceedings should be 
preceded by an assessment of the direct or indirect  effect this may have on the Bank of Greece’s 
                                                 
11  Article 1(6) of the draft law. 
12  See paragraph 4.2(d) of Opinion CON/2008/16 and paragr aphs 8 to 12 of Opinion CON/2005/24. All ECB opinions are 
published on the ECB’s webs ite at www.ecb.europa.eu. 
13  Article 1(8) of the draft law. 
14  See paragraph 4.2(d) of Opinion CON/2008/16. 
15 See e.g. ECB Convergence Report May 2008, p. 20. 
5 ability (both operationally in terms of manpower, and financially in terms of financial resources) to 
fulfil its mandate.  
3.2.4 Staff  
 Special scientific staff employed by the HPISC under private law contracts of indefinite duration16 
may request their integration into the permanent staff of the Bank of Greece following submission 
of an application and a relevant assessment, accepti ng, as appropriate, the te rms and conditions for 
their grade and salary adjustment to be notified by an act of the Governor of the Bank of Greece within two months of publication of the draft law
17. In accordance with what  has been stated on 
previous occasions18, the ECB understands that the Bank of Greece’s autonomy in staff matters is 
respected by such an arrangement and that it is the exclusive and independent decision of the Bank 
of Greece whether to employ the HPISC’s staff. At the same time, it should be ensured that the 
Bank of Greece is able to recruit specialised st aff where appropriate for the proper implementation 
of the new responsibilities in the same way as for its current responsibilities. 
 In line with paragraph 3.2.2 above, it should be en sured, however, that the Bank of Greece does not 
bear any financial obligations deriving from the em ployment relations that new staff may have had 
with the HPISC.  
3.2.5  Contributions of supervised insurance undertakings 
The ECB notes that the contributions of the superv ised insurance undertakings will be defined and 
any relevant detail addressed by a decision of the Minister for Finance19. For reasons of financial 
independence of the Bank of Greece it should be ensured that the performance of the new 
supervisory functions by the Bank of Greece will be adequately financed by the contributions to be 
received from supervised entities and will not r esult in any loss for the Bank of Greece.  
In terms of the competence for defining the contri butions of the supervised insurance undertakings, 
the ECB notes that, to the extent that the ne w supervisory competences will be exclusively 
transferred to the Bank of Greece, the modalities for the definition of such contributions should be 
defined independently by the Bank of Greece20. The attribution of such power to the Bank of 
Greece would reflect international practice establishe d with the aim of safeguarding the supervisory 
authorities’ independence.  
3.2.6  Transitional period 
The substantive and technical details for the un impeded substitution of the Bank of Greece for the 
abolished HPISC, as well as any other specific issues  and details for the purposes of the application 
                                                 
16  As provided for in Article 17 of  Presidential Decree 20/2006, FEK Α 17/7.2.2006. 
17  Article 1(5)(d) of the draft law. 
18  See e.g. Opinions CON/2008/9, CON/2008/10, CON/ 2009/15, CON/2009/45 and CON/2009/47. See also ECB 
Convergence Report May 2008, p. 22. 
19  Article 1(3) of the draft law. These contributions will am ount to a maximum of 1.5 thousandths (1.5 ‰) of the total 
annual yield from gross insurance premiums. 
20  The ECB notes that the framework in place for the superv ision of credit institutions in Greece (Law No 3601/2007, FEK 
A 178/1.8.2007) also provides for the possibility for the Bank of Greece to im pose such contributions. 
6 of Article 1, will be determined by a decision of the Minister for Finance21. In the light of the 
concerns raised above about fina ncial independence and monetary fi nancing, and with a view to 
ensuring a smooth transfer of the supervisory comp etences to the Bank of Greece and their efficient 
performance, the ECB recommends drawing up the de tails for the transfer of such competences by 
a joint decision of the Ministry of Finance and the Bank of Greece. Finally, the ECB notes that the 
draft law provides that the HPISC must be abolishe d from the first day of the third month following 
the publication of the law22. To ensure a smooth transfer of the tasks to the Bank of Greece, the 
draft law should provide for a longer transitional pe riod, to be determined in agreement with the 
Bank of Greece. 
3.3  Failure to amend the draft law along the lines sugg ested in paragraphs 3.2.2, 3.2.3 and 3.2.4 would 
lead the ECB to the conclusion that the proposed arrangements are incompatible with Articles 123 
and 130 of the Treaty.  
 4. Establishment of the Private Life Insurance Guarantee Fund (PLIGF) 
4.1 The PLIGF will be established as a private law legal entity supervised and controlled by the 
Minister of Finance
23. At the same time, several provisions of the draft law assign to the Bank of 
Greece decision-making and/or approving powers  in relation to the PLIGF’s operations, in 
particular in terms of coverage, transfer of lif e insurance portfolios following revocation of an 
insurance undertaking’s authorisation, contributions and internal governance24. In this regard, the 
ECB would like to stress that the activities perfo rmed by the Bank of Greece need to comply with 
the monetary financing prohibition contained in Ar ticle 123 of the Treaty, so it should not have to 
finance any of the PLIGF’s activities in the event that the members’ contributions to the Fund 
under the first and second paragraphs  of Article 10 of the draft law prove insufficient. Moreover, 
the Bank of Greece’s operational independence w ould need to be enhanced. This could be 
facilitated by giving a clearer definition of the Bank of Greece’s involvement in the PLIGF’s 
operations and by an adequate level of centr al bank involvement in the PLIGF’s governance25. The 
attribution to the Bank of Greece of clear and au tonomous responsibility for supervising the PLIGF 
may greatly benefit the efficient and effective fulf ilment of the aims of the draft law to extend its 
current supervisory responsibilities to encompass the insurance sector. In order to ensure the 
                                                 
21  Article 1(10) of the draft law. 
22  Article 1(1) of the draft law. 
23  Article 4 of the draft law. 
24 More specifically, the draft law provides that: (i) the Bank of Greece will decide on actuarial operations and adjustments 
to be performed by the PLIGF, where insurance policy term s and conditions infringe the re levant legislation in force 
(Article 7(2)), while the Minister for Finance, on a proposal  by the PLIGF, addresses any specific issues or details 
(Article 7(3)); (ii) the Bank of Greece wi ll decide on the procedure and any details for the transfer of the life insurance 
portfolios of insurance companies whose authorisation has been revoked (Article 9(1)) and will approve the successor 
insurance undertaking selected by the PLIGF (Article 9(3 )); the Bank of Greece’s Governor will decide on any specific 
issues and details (Article 9(7)); (iii) the Bank of Greece will approve any decision by the Management Committee to 
impose extraordinary contributions in urgent cases (Article 10(2)), while any specific issues and details relating to the 
application of Article 10 will be regulated by a Governor’s d ecision (Article 10(5)); (iv) the PLIGF’s rules of procedure, 
as adopted by its members’ assembly, will be approved by the Bank of Greece (Article 11(2)(b)). 
25  See in this respect paragraph 4.2 of Opinion CON/2008/51. 
7 compliance of the draft law with the abovemen tioned requirements, substantial substantive 
amendments should be made to  the relevant provisions. 
4.2 As noted in paragraph 1.2, the PLIGF will provi de cover for insurance payments deriving from any 
life insurance policies entered into and operations carried out in Greece or other Member States or European Economic Area countries through a branch  or through the free (cross-border) provision of 
services. The ECB understands that some Member States have already established private life insurance guarantee funds, membership of which is  obligatory for insurance companies established 
in these Member States and any branches they may ha ve situated outside the Member State, in line 
with the general principle in Union law of home Stat e supervision. For this reason, and with a view 
to possible future Union initiatives in this area, th e ECB suggests that Article 6 of the draft law be 
amended in order to avoid the operation and memb ership of the PLIGF being made obligatory in 
respect of branches of insurance companies that are already covered by equivalent guarantee funds 
in their countries of establishment.  
 5. Establishment of the Systemic Stability Council (SSC) 
5.1 As pointed out in previous opinions
26, the establishment of national financial stability committees 
may enhance the ability of NCBs and supervisory authorities to provide analytical support to the 
ESRB. The tasks performed by these committees  should complement the ESRB’s activities. 
Therefore, it is particularly important to exploit appropriate synergies. However, it is necessary to 
avoid such national committees being entrusted with  tasks and powers that potentially conflict with 
those of the ESRB and which may undermine its ef fectiveness. Moreover, the legal frameworks of 
these committees should appropriately reflect the NCBs’ roles, should not constrain the independence of their governors or unduly affect the quality and impartiality of their contributions 
as members of the ESRB. With regard to the SSC ’s composition, the ECB notes that committees 
with similar tasks have been established in a num ber of Member States, in the majority of cases 
with their composition restricted to institutional members. Such composition seems preferable, for 
reasons related to safeguarding the competence of the institutional entities entrusted with the 
responsibility for macroeconomic stability analys is and the established confidentiality regime. 
Lastly, in view of the importance of ensuring the effectiveness of macroprudential supervisory 
arrangements at Union level, it is essential to safeguard the ESRB’s ability to perform its tasks 
independently and to guarantee an authoritative a nd effective channel for transmitting its warnings 
and recommendations. Since, under the draft law, the SSC will adopt resolutions and conclusions, it 
is important to ensure that it will function in a wa y that is fully consistent with the abovementioned 
important principles. 
5.2 In particular, the new institutional framework for financial stability in Greece should ensure that the 
involvement of the Bank of Greece and its Gove rnor and Deputy Governor is performed in a 
                                                 
26  Paragraph 2.1 of Opinion CON/2010/3,  paragraph 2.2.2 of Opinion CON/ 2010/7 and paragraph 2.11 of Opinion 
CON/2010/10.  
8 manner that fully complies with the institutional and financial independence of the Bank of Greece 
and with the Governor’s and De puty Governor’s personal indepe ndence, as well as with the 
confidentiality requirements resulting from the Statute of the European System of Central Banks and of the European Central Bank (hereinafter th e ‘Statute of the ESCB’), which are designed to 
safeguard the proper performance of their task s under the Treaty and the Statute of the ESCB
27.  
 
Further implementation of the draft law with rega rd to the SSC’s establishment, organisation and 
mandate should also respect the principle of central bank independence. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 23 April 2010. 
[signed] 
  
The Vice-President of the ECB 
Lucas D. PAPADEMOS 
                                                 
27  See also paragraph 3.1 of Opinion CON/2010/4.