The Comisión Nacional de los Mercados y la Competencia (CNMC) has released its report on the draft law concerning the recovery and resolution of insurance and reinsurance entities (IPN/CNMC/026/26). This legislative initiative aims to strengthen the insurance sector's readiness for potential insolvency scenarios and establish a framework for orderly management to mitigate adverse effects from such insolvencies.

The new regulatory framework introduces a 'total financial responsibility' regime, which is designed to safeguard public funds and align the incentives of investors and managers with the public interest. It also incorporates the principle of proportionality, adjusting administrative burdens based on the size and complexity of the entities involved.

In its recommendations, the CNMC emphasizes the need for the resolution fund, although privately funded, to be treated as state aid, requiring prior approval from the European Commission. It also stresses the importance of structuring the resolution authority (DGSFP) to avoid conflicts of interest and calls for clearer definitions of terms like 'public interest' and 'resolvability criteria'. Furthermore, the CNMC suggests evaluating the competitive impact of accumulating resources in the resolution fund and establishing limits on these resources.

The CNMC can provide consultative support to various legislative and governmental bodies, ensuring that the new law promotes competition and effective regulation within the insurance sector.