European Insurance: Solvency II (28 February 2017)

OAC Digest
EU / European Parliament / EIOPA, Life insurance, Non-Life, PRA / Bank of England, Solvency II

28 February 2017

Selected recent Solvency II news items: 

Solvency II "is now working well, with only a few notable exceptions such as the excessive sensitivity of the risk margin to interest rates" (echoing past comment on the regime's flaws) according to the PRA's Executive Director of Insurance Supervision. David Rule's speech "Solvency II one year in" (on 21 February) made a number of references to internal models (observing "that firms proposed considerably more changes that reduced rather than increased capital requirements") and the use of matching adjustment in relation to annuity business (stating "We remain open to suggestions that fit within the current legal structure"). He also states they will "give firms the full benefit of TMTPs when considering their capital positions" with the transitional measure "[cushioning] the immediate impact of new requirements for technical provisions introduced by Solvency II – notably the risk margin."

On 16 February, the PRA published an update to "Supervisory Statement SS25/15 Solvency II: regulatory reporting, internal model outputs." The updates relate to updated references and template names.    

On the same date, the PRA published a further update to "Supervisory Statement | SS26/15 Solvency II: ORSA and the ultimate time horizon – non-life firms." The updates and additions relate to the templates and instructions for submitting internal model output information on an ultimate time horizon basis.

Also, for information only, on 16 February, EIOPA published their "Decision on the collaboration of the insurance supervisory authorities" reinforcing co-operation and exchange of information between Member States.

Please note that the consultation period for EIOPA's "Discussion Paper on the review of specific items in the Solvency II Delegated Regulation" (see OAC Digest of 12 December 2016) closes on 3 March 2017.

David Gray

For more information
David Gray
Consultant Actuary

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