6533b7defe1ef96bd1275b50

RESEARCH PRODUCT

Integrating the Compliance Function into the Legal Department

subject

description

This chapter addresses a governance issue: whether it is permissible under the insurance supervisory regime of Solvency II for an insurance undertaking to merge its compliance function with its legal department. The Solvency II provisions in fact do not address the legal department of an insurance undertaking. But the tasks and powers of a legal department are in part the same as those of the compliance function under art. 46, para. 1 of the Solvency II Directive. The conclusion is thus: General insurance supervisory regime principles such as functional segregation and functional independence do not prohibit such a merger. Indeed, such a merger would seem to be advisable in many instances in light of the supervisory law principles of freedom of internal organization and of proportionality.