European Insurance: Solvency II (17 October 2016)

OAC Digest
EU / European Parliament / EIOPA, Life insurance, Solvency II

17 October 2016

Selected recent Solvency II news items: 

On 11 October, the EC published, in the Official Journal of the European Union, Implementing Regulation (EU) 2016/1800 (which enters into force 20 days after publication). This lays down implementing technical standards with regard to mapping agencies' credit ratings to credit quality steps.

On the same date, the PRA published Occasional Consultation Paper CP36/16. This includes proposed minor corrections to the External Audit chapter (which applies to UK Solvency II firms) in the PRA Rulebook.   

EIOPA has published the "Summary of Conclusions" from the Insurance and Reinsurance Stakeholder Group (IRSG) meeting held on 15 September. This is a useful document covering the discussions around the various presentations. The following extracts, in respect of Solvency II matters, were of note:

  • First Solvency II peer review has been launched. The theme is proportionality in application of key functions requirements. Closure is expected by autumn 2017.
  • Sovereign risk is a topic where EIOPA is conducting analysis, although it is not in the scope of the European Commission call for advice.
  • EIOPA will focus its work on the risk margin, on reviewing the cost-of-capital.
  • EIOPA will prioritise reducing the complexity and ensuring the proportionality of the requirements.
  • The advice EIOPA provided on the infrastructure corporates is currently being reviewed and the new legislation is likely to be finalised in the first quarter of next year.
  • Results from participants of the Insurance Stress Test are being validated centrally by EIOPA with publication in December. This stress test targeted only business models that are affected by the low interest rate (i.e. life business with guarantees). The aim is to have a full stress test in 2018 and details of reporting will be decided later.
  • Drafting of the Supervisory Handbook is progressing very well. Currently the team is working on the chapter on the life technical provisions and updating the ORSA, next topics will be the SCR and own funds. Good practices and concrete examples will be used to find the key characteristics of European supervisory culture. The target date for finalisation is end of next year.

On 10 October, FundsLibrary and FactSet announced their partnership aimed at meeting the asset reporting requirements under the Solvency II regime.

David Gray

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David Gray
Consultant Actuary

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