UK: EIOPA Consults On Guidelines For Solvency II Interim Measures

Last Updated: 18 April 2013
Article by Deloitte Financial Services Group

Most Read Contributor in UK, August 2017

Shortly before Easter, the European Insurance and Occupational Pensions Authority (EIOPA) opened consultation on four sets of Guidelines which seek to bring forward the implementation of certain Solvency II requirements to 1 January 2014.

EIOPA's chief objective is to ensure a consistent and convergent approach to Solvency II preparation across EU Member States, given that in the absence of a political agreement on Omnibus II, National Competent Authorities (NCAs) may individually take interim (and possibly inconsistent) regulatory measures.

The proposed Guidelines are applicable both to insurance and reinsurance undertakings and groups. They are to be applied in proportion to the "nature, scale and complexity of the risks inherent in the business" of the undertaking or group.

Below, please find a brief overview of, and a link to, each of the four sets of Guidelines:

Guidelines on submission of information to NCAs

Information should be submitted by "at least" insurance and reinsurance undertakings or groups that represent a significant share of national markets, in addition to any existing reporting requirements. EIOPA sets the following thresholds:

  • firms constituting 80% in total of the market share in each Member State should be subject to annual reporting requirements and 50% of the market share to quarterly reporting requirements
  • groups with total consolidated assets in excess of EUR 12 billion should submit both annual and quarterly reports to their group supervisor

EIOPA recommends that firms submit only a subset of both qualitative and quantitative reporting requirements. The proposed quantitative subset consists of information on the balance sheet, assets, derivatives and technical provisions, own funds, Solvency Capital Requirement, Minimum Capital Requirement and the scope of the group (where applicable).

EIOPA envisages that only one annual report and two quarterly reports be submitted before Solvency II becomes applicable; therefore the implementation schedule of these Guidelines is to be coordinated with the Solvency II expected implementation date – which is currently January 2016, but might be revised following Omnibus II developments this year.

NCAs are expected to consider the information provided and use it to assess and improve readiness for Solvency II requirements. However, NCAs are not expected to take any regulatory or enforcement action based on the data supplied.

EIOPA states that firms and NCAs should also "put in place and test the systems that will be needed to comply with Solvency II reporting requirements, and to analyse and improve over time the quality of data produced."

Access the proposed Guidelines.

Guidelines on forward looking assessment of the undertaking's own risks (based on ORSA principles)

EIOPA recommends that NCAs require insurance and reinsurance firms to undertake a forward looking assessment of own risks (based on ORSA principles), supplemented by quantitative information accessible for review. NCAs will have to ensure that undertakings representing at least 80% of the market share assess if they are in a position to continuously comply with regulatory capital requirements and technical provisions.

Firms will be required to submit an assessment policy, conduct assessments at least once a year and communicate their findings and conclusions both internally and to their supervisors.

Firms involved in the pre-application process for internal models should make use of this model for the purposes of the ORSA, but make provisions for the eventuality that their model is rejected.

A report to the NCA should be submitted within two weeks of an assessment and it should include, at least: (i) qualitative and quantitative results (ii) methods and main assumptions and (iii) where applicable, a comparison between overall solvency needs, the regulatory capital requirements and the undertaking's own funds.

In cases where the undertaking is part of a group, an assessment should encompass all entities within the scope of group supervision; group supervisors should communicate to colleges and involve NCAs regarding the need of individual vs. group-level supervisory reporting.

Access the proposed Guidelines.

Guidelines on system of governance

EIOPA puts forward recommendations on the steps NCAs should take to ensure firms build effective governance systems, allowing them to identify, monitor, measure and report risks continuously and on individual and aggregated basis as well as to provide NCAs with the qualitative information necessary to evaluate these systems.

The Guidelines cover fit and proper requirements, risk management, the prudent person principle, governance of own funds, internal controls, internal audit function, actuarial function, outsourcing, and group specific governance requirements. Provisions for the prudent person principle should be implemented in addition to the system of regulatory quantitative limits already applicable under the current regime.

Firms will be expected to demonstrate transitional arrangements for putting in place all governance requirements related to investments. This however does not mean that all portfolio changes stemming from Solvency II requirements should be fully implemented.

In making provisions for the actuarial function, EIOPA clarifies that as actuarial tasks in the interim period are predominantly related to submissions of interim information to NCAs, a framework for the purposes of preparatory reporting will be provided at a later stage.

Access the proposed Guidelines.

Guidelines on pre-application of internal models

NCAs need to form a view on how prepared firms are to submit an application for the use of an internal model for solvency capital calculations, with the expectation that models should be used for risk management and decision making purposes, as well as for the calculation of the Solvency Capital Requirement. Firms should also be prepared for the eventuality that the model is not approved and have processes in place for, and consider the planning implications of, using the standard formula.

NCAs should monitor and review changes to internal models, and define the qualitative and quantitative parameters of a 'major change'.

EIOPA sets specific Guidelines for most other aspects of the internal model framework: compliance with 'use test' requirements, assumptions setting and use of expert judgement, consistency between methods used for calculation of probability distribution forecasts and assets and liabilities for solvency purposes, use of approximations, profit and loss attribution, validation, documentation, reliance on external models and data, and the functioning of colleges during the pre-application process.

Access the proposed Guidelines.

Next steps

Consultation on the Guidelines closes on 19 June 2013. Following the publication of the finalised text , NCAs are to "make every effort" to comply by 1 January 2014 as well as produce a progress report on annual basis, the first of which is expected by 28 February 2015. As per EIOPA's founding regulation, NCAs should either comply or provide reasons for non-compliance.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.