The European Insurance and Occupational Pensions Authority (EIOPA) has published the final Guidelines for the preparation of Solvency II. The Guidelines were finalized following the public consultation earlier this year, during which EIOPA received over 4000 comments.
With its Guidelines, EIOPA intends to significantly increase preparedness of both supervisors and insurers for Solvency II once the new framework is applicable. The Guidelines aim to ensure that National Competent Authorities(NCAs), insurance companies and groups take active steps towards implementing certain key elements of Solvency II in a consistent and convergent way. It is up to NCAs to decide how best to incorporate the Guidelines into their national regulatory or supervisory framework. The Guidelines foresee a gradual application through “phasing-in” provisions (i.e. different expectations for 2014 and 2015).
EIOPA Guidelines cover a number of key areas of Solvency II: system of governance, including risk management; forward looking assessment of the undertaking’s own risk(based on the Own Risk and Solvency Assessment (ORSA) principles); submission of information to NCAs; pre-application for internal models.
EIOPA envisages issuing the Guidelines in all the official EU languages on 31th October with the application date of 1st January 2014. The NCAs will report to EIOPA about their compliance or intention to comply within 2 months after the Guidelines’ issuance. The NCAs are required to submit a progress report to EIOPA on the Guidelines’ implementation in February 2015.
Gabriel Bernardino, chairman of EIOPA, said: “I would like to thank all the stakeholders for their valuable input during the public consultation. Their comments and suggestions helped us to refine the content and achieve a better balanced approach to the preparatory phase. Tgether we have made a decisive step towards Solvency II. The move towards a risk-based supervisory system like Solvency II presents a number of important challenges to undertakings and supervisors. These Guidelines are a key step in order to ensure that preparation will be done in a consistent manner for the benefit of the internal market, industry and consumers”.
The consultation reports for the Guidelines together with the individual feedback on each comment can be found on EIOPA website:
https://eiopa.europa.eu/consultations/consultation-papers/2013-closed-consultations/march-2013/guidelines-on-preparing-for-solvency-ii/index.html
Peter Ott, European Head of Solvency II at KPMG, comments: “We are pleased that EIOPA have taken on board industry feedback and modified their proposals slightly. However, the parallel running of current and future regulatory systems will still cause resource constraints.
Now it is clear that the first pillar 3 reporting will be required before the end of 2015, insurers will need to move forward with plans to accelerate their reporting processes.”
Janine Hawes, insurance director at KPMG, added “The removal of the December 2015 quarterly return from the dry-run will be welcomed by industry. If the implementation date of Solvency II is confirmed as 1st January 2016 when Omnibus 2 is passed, most insurers will need to complete a quarterly dry-run at 30st September 2015 and an annual dry-run at 31st December 2015.
We welcome the extra two weeks granted in respect of the annual reporting during this preparatory phase. While a positive step, this will not entirely remove the resource challenges over the first few months of 2016, with a multiplicity of reporting requirements, including any ‘day 1’ reporting requirements arising from Omnibus2.
There is, however, likely to be disappointment that both the reporting of a detailed list of assets and the narrative reporting have been retained.”
|
