(Bloomberg) — Insurers from Prudential Plc to Axa SA face tougher European Union oversight of compensation as the bloc seeks to crackdown on awards that could spur irresponsible risk taking.
Draft European Commission plans would require insurers to defer handing over a “substantial portion” of bonuses for at least three years in a bid to link pay to the firm’s longer-term performance, according to a document obtained by Bloomberg News.
Compensation policies should also incorporate measures to prevent over-reliance on bonuses, and avoid “conflicts of interest,” according to the document.
The plans are part of a set of draft standards to build on an overhaul of EU rules for insurers that will take effect in 2016. The measures, known as Solvency II, rewrite requirements ranging from capital rules to governance practices.
The commission, the EU’s executive arm, is responsible for preparing technical measures to flesh out financial legislation, which it then publishes for review by legislators. The nonpublic document, dated March 14, sets out work on those standards.