EIOPA has published an opinion addressed to national competent authorities (NCAs) to ensure the appropriate application of legal requirements and consistent supervisory practices in relation to the calculation of technical provisions and the governance of cross-border business of a long-term nature.
Long-term non-life insurance business operated on a cross-border basis is usually more uncertain than other non-life business requiring specific knowledge of local market specificities and specific actuarial skill for the calculation of the technical provisions and management of the activity. EIOPA has identified deficiencies relating to the calculation and supervisory assessment of the solvency position of undertakings carrying out such business.
The opinion sets out EIOPA’s expectations and recommendations to NCAs in the following three areas:
- Expectations on technical provisions with a focus on the best estimate calculation;
- Expectations on the key functions and the administrative, management or supervisory body; and
- Recommendations on the supervisory review process and the collaboration between home and host member state NCAs.
Annexes to the opinion also contain examples of good practices for the calculation technical provisions in problematic areas such as French construction defect insurance and Italian medical malpractice insurance. Further annexes may be developed in the future to provide additional examples of technical provisions calculation and quantitative information for such business.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.