Central Bank approach to implementing EIOPA's guidelines for Solvency II

 On 24 May 2013, the Central Bank hosted an industry briefing on its approach to implementing EIOPA's guidelines on Solvency II. The Central Bank confirmed that it will introduce its own set of guidelines later this year which will closely mirror the content and wording of EIOPA' s guidelines. They will apply to all undertakings subject to the Solvency II Directive, with a small number of exceptions. In implementing EIOPA's guidelines, the Central Bank confirmed that it will align with the PRISM framework. All high and medium high impact firms will be subject to the guidelines from 1 January 2014 with a phasing in period for low and medium low firms. The Central Bank confirmed that there is no conflict but there are some differences between EIOPA's guidelines and current corporate governance requirements. Finally, the Central Bank stressed that its approach to implementing the guidelines may be subject to change based on the outcome of EIOPA's consultation on the guidelines and any additional developments in relation to Solvency II.

Please click here to view the briefing papers in full.

Solvency II Matters

 The Central Bank has published the latest edition of Solvency II Matters. The newsletter provides an update on Solvency II policy developments, implementation activities and events including the following:

(a) Guidelines on preparing for Solvency II

On 27 March, EIOPA launched a public consultation on Guidelines related to the preparation for Solvency II. The Guidelines cover those areas that EIOPA considers fundamental to ensure effective preparation for Solvency II:

  • system of governance;
  • forward looking assessment of the undertaking's own risk (based on the Own Risk and Solvency Assessment (ORSA) principles);
  • submission of information to National Competent Authorities (NCAs); and
  • pre-application of internal models.

The Guidelines are specifically addressed to NCAs and detail how NCAs should prepare for the application of Solvency II. The consultation closed on 19 June 2013.

(b) Industry Briefing – Guidelines on preparing for Solvency II

On 24 May, the Central Bank hosted a well-attended industry briefing on Guidelines on preparing for Solvency II.

(c) Long-term guarantee impact assessment

EIOPA has continued to work on the Impact Assessment (IA) for Long-Term Guarantees. The IA was launched on 28 January 2013 and the closing date for submissions by participating firms was 31 March 2013.  The main elements of the IA are as follows:

  • adapted relevant risk free rate term structure tested at various levels;
  • matching adjustment – including both the "classical" version where there are very strong restrictions relating to applicable liabilities and related matching assets and a parallel proposal with wider application known as the "extended" version;
  • Extrapolation – rules for determining the risk free curve beyond what can be derived from the liquid swap and gilt market and testing of the period of convergence; and 
  • Transitional rules.

(d) Update on Omnibus II

Agreement on the text of the Omnibus II Directive has not yet been reached and the European Parliament has once again rescheduled the plenary vote on the Directive from 10 June 2013 to 22 October 2013. This date appears to be more realistic given the current status of the trilogue discussions and achieving successful resolution on Omnibus II remains a priority for the Commission.

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

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