1. SOLVENCY II
1.1 EIOPA issues opinion on the supervision of the use of climate change risk scenarios in the ORSA
On 19 April 2021, the European Insurance and Occupational Pensions Authority (EIOPA) published its opinion on the supervision of the use of climate change risk scenarios in the Own Risk and Solvency Assessment (ORSA). This opinion is addressed to national competent authorities (NCAs) and sets out EIOPA's expectations relating to the supervision of the integration of climate change risk scenarios by insurers into their ORSA.
The opinion follows a risk-based and proportionate approach, recognising that methodologies are still developing and insurers need to gain experience. The opinion provides practical guidance on how to select and use climate change scenarios and expects NCAs to collect qualitative and quantitative data to perform a supervisory review of the analysis of short and long-term climate change risks in the ORSA.
EIOPA will start monitoring the application of the opinion by the NCAs two years after its publication.
The opinion can be accessed here.
1.2 Commission Implementing Regulation published in the Official Journal of the European Union
On 7 May 2021, Commission Implementing Regulation (EU) 2021/744 regarding technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 31 March 2021 until 29 June 2021 under the Solvency II Directive (2009/138/EC) (Solvency II Directive) was published in the Official Journal of the European Union
The Commission Implementing Regulation entered into force on 8 May 2021 and it applies from 31 March 2021.
The Commission Implementing Regulation can be accessed here.
1.3 European Union (Insurance and Reinsurance) (Amendment) Regulations 2021
On 30 June 2021, the European Union (Insurance and Reinsurance) (Amendment) Regulations 2021 (S.I. No. 240 of 2021) (the 2021 Regulations) came into operation.
The 2021 Regulations amend the European Union (Insurance and Reinsurance) Regulations (S.I. No. 485 of 2015) (the Solvency II Regulations) to require the Central Bank of Ireland (Central Bank) to notify EIOPA and the supervisory authorities in host Member States of certain matters regarding insurance undertakings authorised by the Central Bank and operating on a freedom of services basis. The 2021 Regulations also provide for the establishment of collaboration platforms between the Central Bank, EIOPA and other supervisory authorities to enhance collaboration and strengthen the exchange of information between such authorities.
The 2021 Regulations can be accessed here.
1.4 Updated Questions and Answers on Regulation
During the second quarter of 2021, EIOPA published updated Questions and Answers (Q&As) relating to the following topics under Solvency II:
- Reinsurance – Question ID 1898;
- Technical Provisions - Question ID 2115, Question ID 2029;
- Captives - Question ID 1760;
- Solvency Capital Requirement (SCR) – Question ID 2174, Question ID 2124, Question ID 2086, Question ID 1424, Question ID 984, Question ID 1863, Question ID 1894, Question ID 1857, Question ID 1848, Question ID 1484, Question ID 1991, Question ID 2026, Question ID 1885, Question ID 1315, Question ID 1852, Question ID 1867, Question ID 2007;
- Risk Free Rate (RFR) – Question ID 2118, Question ID 1433;
- Disclosure Templates – Question ID 1171; and
- Other topics – Question ID 2052, Question ID 1211, Question ID 1525, Question ID 1693, Question ID 1833, Question ID 2081, Question ID 2089, Question ID 2061, Question ID 2052, Question ID 2032, Question ID 2016, Question ID 1974, Question ID 2258, Question ID 1925, Question ID 1861, Question ID 2014, Question ID 1706, Question ID 1314, Question ID 1720, Question ID 1502 and Question ID 1543;
2. EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY (EIOPA)
2.1 EIOPA launches consultation on framework to address value for money risk in the European unit-linked market
On 13 April 2021, EIOPA launched a consultation on a framework to address value for money risk in the European unit-linked market.
The consultation is a response to EIOPA's concerns that, while unit-linked products can and often offer important benefits for policyholders, the costs of some unit-linked products continue to remain too high. The COVID-19 pandemic has heightened these concerns as the low interest rate coupled with market shocks and the risk that households will need increased access to liquidity underline how important it is that unit-linked products always offer value to consumers.
The aim of this consultation is to seek views on the proposed framework that should serve as the basis to assist insurance product manufacturers in assessing whether their unit-linked (and hybrid) products offer value for money and whether adequate measures are taken to mitigate risks relating to product complexity.
EIOPA invites feedback from stakeholders on the proposed framework until 16 July 2021.
The consultation can be accessed here.
2.2 EIOPA publishes a discussion paper on blockchain and smart contracts in insurance
On 29 April 2021, EIOPA published a discussion paper on blockchain and smart contracts in insurance (the Discussion Paper).
The Discussion Paper provides a high-level overview of risks and benefits of blockchain and smart contracts in insurance from a supervisory perspective and aims to gather feedback from stakeholders on these matters.
EIOPA invites stakeholders to provide feedback on the Discussion Paper by 29 July and will assess the feedback to better understand and address blockchain developments in the insurance sector, including the risks and benefits related to them.
A copy of the Discussion Paper can be accessed here.
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