European Union: EIOPA Update - June 2015

EIOPA publishes updated quarterly risk dashboard for Q1 2015

On 8 June 2015, EIOPA published its updated quarterly risk dashboard, based on data provided by certain insurance groups for Q1 of 2015. The risk dashboard indicated that the risk environment facing the insurance sector remains challenging. It also noted that the risk sensitiveness introduced in Solvency II capital requirements will increase undertaking's awareness on their exposure to products with long-term guarantees, especially in low yield environments like the current one. As a response to that insurers will likely adapt their business models or their ALM strategies or both.

To read the full text of the risk dashboard update, please click here.

EIOPA publishes Solvency II relevant risk-free interest rate term structures

EIOPA has published technical information and documentation in relation to the risk-free interest rate term structures for Solvency II. The technical information consists of the risk-free interest rates term structures for 53 countries, the values of the volatility adjustment for each structure, and the values of the fundamental spread to be applied to calculate the matching adjustment. The technical documentation consists of the methodology, assumptions and data used to calculate the technical information.

This information was published by EIOPA ahead of the implementation date to allow insurance companies to prepare for the new supervisory system in 2016. The information will be updated by EIOPA on a monthly basis which may be used as part of the process of discounting technical provisions under Solvency II. This information was prepared by EIOPA after careful consideration of the comments received during its public consultation in November 2014.

To read the full text of EIOPA's press release, please click here.

EIOPA publishes a number of Solvency II publications

Over the past few months EIOPA has released a number of publications relating to Solvency II in advance of the implementation of the Solvency II directive. These publications included:

(i) Updated Solvency II data point model and XBRL taxonomy

EIOPA has published updated information on its data point model and XBRL taxonomy design which have been developed in accordance with EIOPA Guidelines on the Submission of Information to National Competent Authorities.

For the full text of the announcement and publication, please click here.

(ii) Responses received to consultation on draft Solvency II Implementing Technical Standards and guidelines

On 19 March 2015, EIOPA updated the consultation section of its website to include the responses received to the consultation paper on Solvency II draft Implementing Technical Standards and guidelines from December 2014.

The consultation section of EIOPA's website can be found here.

(iii) Solvency II recovery plans and finance schemes

On 27 March 2015, EIOPA published its technical advice to the European Commission on the Regulatory Technical Standards on the recovery plans and finance schemes to be provided by insurers in cases of non-compliance with the Solvency and minimum capital requirements under Solvency II.

For the full text of the advice, please click here.

(iv) EIOPA Q&As on Solvency II Guidelines

Recently, EIOPA has released documents providing answers to questions regarding three sets of guidelines it has issued: on group solvency, classification of own funds and undertaking-specific parameters.

These answers and the online tool for submitting questions on EIOPA's guidelines can be found here.

EIOPA issues first set of Guidelines under Solvency II Directive

EIOPA has published set 1 of the Solvency II Guidelines following public consultation from 1 June 2014 to 28 August 2014. The guidelines are non-binding instruments drafted by EIOPA and directed at National Competent Authorities and Financial Institutions and are intended to ensure a common, uniform and consistent application of EU law. National Competent Authorities were expected to indicate to EIOPA within two months whether they were going to comply with these guidelines, and if not, to explain the reasons for non-compliance. These guidelines cover a number of topics including risk and solvency assessment, contract boundaries, ring-fenced funds and supervisory review.

Set 1 of the EIOPA guidelines under the Solvency II directive can be found here.

EIOPA publishes symmetric adjustment of Solvency II equity capital charge

EIOPA has published the technical information on the symmetric adjustment of the equity capital charge. This publication aims to help insurers to calculate their solvency position and to deliver reporting templates for the Solvency II preparatory phase. Further updates were provided in April 2015 and May 2015 to assist in the calculation of solvency positions. This technical information will continue to be updated on a monthly basis, based on the behaviour of the equity index prepared by EIOPA for this purpose.

The full set of technical information can be found here.

EIOPA publishes opinion on sales of insurance and pension products via the internet

EIOPA has issued an opinion on the sales of insurance and pension products via the internet. This opinion was issued as a substantial percentage of customers use digital and remote channels to purchase such products and EIOPA envisages an increase in these customers over time. The opinion recommends that National Competent Authorities ("NCAs") take the necessary and proportionate supervisory actions to ensure that online distributors comply with their duties of disclosure under domestic law and that proactive steps are taken in collecting data to prevent consumer detriment. EIOPA has sought feedback from NCAs within six months of the publication of the opinion.

The full text of the opinion can be found here.

EIOPA publishes letter to the European Commission on Recovery and Resolution

EIOPA has published a letter sent from Gabriel Bernardino of EIOPA to Lord Johnathan Hill, Commissioner for Financial Stability, on the issue of Recovery and Resolution. In the letter Mr Bernardino draws Mr Hill's attention to a number of "useful conclusions" that can be drawn to inform the policy making agenda. These include the fragmentation of existing systems and emerging conflicting national solutions, the risk of a "double hit stress scenario" and the role of Insurance Guarantee Schemes.

The full text of the letter can be found here.

EIOPA publishes report on functioning of colleges and accomplishments on action plan 2014

EIOPA has published its year-end report on the Functioning of Colleges and Accomplishments of Action Plan for 2014. It noted that most countries' colleges have developed in line with the expectations set out in EIOPA's Action Plan for colleges but that difficulties have arisen in assessing the progress of non-internal model groups in preparing for Solvency II. It further noted that the countries where the NCAs have started to establish an authority-wide consistent approach towards group supervision, the colleges are functioning more effectively.

To access the full text of the report, please click here.

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