The European Insurance and Occupational Pensions Authority (EIOPA) recently published its Supervisory Convergence Plan for 2021 (Plan). The COVID-19 pandemic has highlighted the potential for differing interpretations of laws and regulations by National Competent Authorities (NCAs) across the internal market. The Plan reaffirms EIOPA's view that supervisory convergence is one of its key strategic goals. Supervisory convergence will be source of continued focus by EIOPA for the coming years.
Priorities Areas in the Plan
Under the Plan, EIOPA will continue its existing work in what it calls the three building blocks of supervisory convergence:
- practical implementation of the common supervisory culture and further development of supervisory tools;
- risks to the internal market and the level playing field, which may lead to supervisory arbitrage; and
- supervision of emerging risks.
On the practical implementation of the common supervisory
culture, EIOPA confirms it will continue working on common
benchmarks for the supervision of internal models.
In addition, EIOPA will work on supervisory assessments of conduct risks and areas where further development is required, for example the application of proportionality in Solvency II.
The risk from cybersecurity is a growing area of concern for many industries including how (re)insurers underwrite this risk. EIOPA will continue its work by:
- establishing a system for the exchange between NCAs and the three European Supervisory Authorities of information about cybersecurity and cyber-attacks;
- implementing objectives and goals set in the Cyber Underwriting Strategy (as defined in February 2020); and
- further improving the reporting requirements for cyber risks in the implementation of technical standards on supervisory reporting.
New Priorities for 2021
EIOPA identifies three new priorities for 2021. EIOPA plans to:
- implement step-by-step measures into order to integrate environmental, social and governance risks into prudential and conduct supervision by NCAs;
- address supervisory concerns arising from the recent market development of multi-employer institutions for occupational pensions provision providers; and
- further analyse and identify potential risks to the internal market following the identification of inconsistencies in the way NCAs treat third country reinsurance undertakings. This could lead to legislative change through amendments to the Solvency II Directive.
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