Ireland: EIOPA Update 13 Mar 2014

Last Updated: 18 March 2014
Article by Darren Maher and Sharon Daly

EIOPA publishes ERRATA amending Guidelines on the Submission of Information

EIOPA has recently published an ERRATA and an Explanatory text to the ERRATA on Guidelines on the Submission of Information to National Competent Authorities.

Please click here to view the text of the ERRATA in full.

EIOPA publishes timeline for Solvency II Implementing Technical Standards and Guidelines

EIOPA has published its timeline for the delivery of Solvency II Implementing Technical Standards (ITS) and Guidelines. These will form part of the regulatory and supervisory framework for the technical implementation of the Solvency II regime from 1 January 2016,  the first day of application. The ITS and Guidelines will be prepared by EIOPA in two separate phases and will consist of four main documents.

Please click here to view the text of the timeline and related information.

Report on Good Practices on Comparison Websites

EIOPA has issued a Report on Good Practices on Comparison Websites. The Report seeks to promote transparency, simplicity and fairness for internet users in the market for online comparisons of insurance products.

The Report gives guidance on topics such as (i) information about the comparison site itself, (ii) the market coverage of the site, (iii) how the site deals with conflicts of interest, (iv) the criteria used to make the ranking of providers and products, and (v) the presentation and the frequency of updating the information.

EIOPA considers the following to be good practices for a comparison website:

  • disclose those providers with whom a comparison website has a commercial, contractual or ownership relationship
  • do not use price as the sole criterion for comparison
  • avoid jargon and unnecessary technical terms

Please click here to view the full text of the Report.

2014 European Insurance Stress Test

EIOPA has recently announced further details on the proposed stress testing of the European insurance industry. The aim of the 2014 exercise is to test the resilience of insurers regarding market risk under a combination of historical and hypothetical scenarios. Insurance risk will also be tested and, as a follow up to its Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment, EIOPA will also include a low yield element in the exercise.

The stress testing timetable is as follows:

  • 30 April 2014: Launch of a Europe-wide stress test for the insurance sector
  • May 2014: Workshop with industry participants
  • 20 June 2014: Collection and validation of undertakings' data by the national supervisory authorities
  • 21 July 2014: Centralised validation of all submissions by EIOPA
  • November 2014: Disclosure of the results of the stress test analysis

EIOPA has stated that it will provide industry participants with further updates on the status of and the upcoming steps of the stress test. Consultations are planned for March 2014 before launching the stress test exercise by 30 April.

Please click here for further details on the Insurance Stress Test 2014.

Risk Dashboard December 2013

EIOPA has published its latest Risk Dashboard based on 2013-Q3 indicators submitted by 30 large insurance groups on a best efforts basis. The Risk Dashboard shows that the risk environment facing the insurance sector remains relatively unchanged since the last EIOPA Risk Dashboard was published in September 2013.

Insurance companies continue to be hampered by low yields and a weak macroeconomic environment.

To view the Risk Dashboard, please click here.

Technical Report on Standard Formula Design and Calibration for Certain Long-Term Investments

On 19 December 2013, EIOPA published the Technical Report on Standard Formula Design and Calibration for Certain Long-Term Investments.

The Report was prepared on request by the European Commission and required input from a range of experts from industry, regulatory bodies and the academic world. Its purpose is to examine whether the capital requirements for certain long-term investments under Solvency II can be reduced without jeopardising the prudential nature of the regime. The key proposal of EIOPA is to introduce a more granular treatment of securitisations. Instead of the currently proposed uniform 7% spread risk charge for AAA-rated securitisations, EIOPA recommends a decrease in the charges for less risky issues to 4.30% while increasing them for riskier ones to 12.50%.

For identifying less risky securitisations EIOPA has developed a set of criteria related to the structure of securitisation, the quality of the underlying assets, the underwriting processes and the transparency for investors.

To view the Report in full, please click here.

Report on Consumer Trends

EIOPA has issued a Report on Consumer Trends.

The Report highlights the following high level trends:

  • Lack of / misleading disclosure of information to policyholders
  • Practices by insurers or intermediaries such as unilateral changes in the terms of policies
  • Consumers focus more on the price than the protection by the product

EIOPA has stated that it will consider the trends and areas highlighted in the Report and, where appropriate, develop targeted policy and supervisory proposals to enhance consumer protection in the EU.

To view the Report in full, please click here.

Report on Good Supervisory Practices regarding knowledge and ability requirements for distributors of insurance products

On 9 December 2013, EIOPA published a Report on Good Supervisory Practices regarding knowledge and ability requirements for distributors of insurance products. The Report sets out good supervisory practices in the form of high-level principles that competent authorities should apply to all distributors of insurance products. These are supplemented by indicative examples of what a competent authority could require a distributor to demonstrate in terms of knowledge and ability, thus allowing for flexibility to adopt a proportionate approach at national level. For example, the Report promotes appropriate knowledge (eg, about legal aspects, consumer protection requirements, tax regimes, markets and products) and ability (eg, about risk perception, underwriting process, claims procedures) for distributors and the demonstration of ethical and professional conduct at all times (eg, consider the best interest of the consumer in circumstances connected to the contract).

To view the Report in full, please click here.

Guidelines on complaints-handling by insurance intermediaries

On 3 December 2013, EIOPA issued Guidelines on complaints-handling by insurance intermediaries. The Guidelines follow the publication of previous guidelines on complaints–handling by insurers and set down guidance on appropriate internal systems and controls for complaints-handling, the provision of information and procedures for responding to complaints. The Guidelines, which lay down high-level principles for National Competent Authorities (NCAs), are supplemented by a Report on best supervisory practices in relation to insurance intermediaries. The Guidelines promote a proportionate approach, taking into account the wide variety of intermediaries, many of which are 'one man bands'.

To view the Guidelines in full, please click here.

To view the Report on Best Practices by Insurance Intermediaries in handling complaints, please click here.

Opinion on Beneficiary Protection Arrangements Regarding Life Insurance Contracts

EIOPA has published an Opinion on Beneficiary Protection Arrangements Regarding Life Insurance Contracts. The Opinion is addressed to National Competent Authorities and aims to facilitate adequate measures to ensure the effective protection of beneficiaries of life insurance policies and to foster a consistent consumer protection approach throughout the European Union.

The objective of the Opinion is to ensure that beneficiaries of life insurance policies enjoy sufficient protection by ensuring that life insurance policies are paid out to beneficiaries where due. The Opinion outlines certain beneficiary protections currently in place in some EU Member States that are aimed at ensuring tangible gains for consumers by avoiding a situation where policies are not paid out to beneficiaries where due. The protection arrangements can be categorised into two groups: (1) measures aimed at facilitating the search for policies by beneficiaries themselves and (2) the imposition of special search obligations on insurance undertakings.

EIOPA recommends that NCAs should facilitate or assist with or advise upon the establishment of a national beneficiary arrangement for life insurance policies, where no such arrangements are already in place. EIOPA may at a later point in time monitor the establishment of any such arrangements.

To view the Opinion in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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