27 March 2013

Eiopa launches consultation on Solvency II "preparation" guidelines

The European Insurance and Occupational Pensions Authority (Eiopa) has launched a public consultation on guidelines for the preparation of Solvency II, to apply from 1 January 2014.

The guidelines, previously called "interim measures", include systems of governance, including the risk management system and own risk and solvency assessment (ORSA), pre-application of internal models and reporting to supervisors.

The consultation is split into four papers, available here https://eiopa.europa.eu/consultations/consultation-papers/index.html

Eiopa released its original opinion -- on measures to capitalise on work undertaken by European insurers and supervisors for the delayed Solvency II directive, prior to the expected 2016 deadline -- in December 2012.

The proposals have been met with concern from many in the industry, particularly the pillar 3 reporting requirements (see IERM, 12 March.)

But Eiopa said it will allow some flexibility through provisions for 'phasing-in' and the use of thresholds, and it aims to ensure that the guidelines are applied in a "manner that is proportionate in the context of the preparatory phase" (see IERM, 23 January.)

European supervisors or National Competent Authorities (NCAs) will determine how to comply with the guidelines by incorporating them into their regulatory or supervisory framework in an "appropriate manner."

Eiopa said NCAs are expected to ensure that insurance companies and groups take active steps towards implementing the relevant aspects of the regulatory framework addressed in the guidelines, so that when Solvency II is applicable, its requirements can be fully complied with.

However, Eiopa stressed that the guidelines should be applied in a proportionate way, especially for small and medium-sized undertakings.

The public consultation will end on 19 June 2013, with the final guidelines planned for autumn.

"These guidelines are an important step towards consistent and effective supervisory practices in the preparation for the Solvency II implementation. They will play an important role in supporting the good function of the internal market in the insurance sector and will ensure a higher quality of information. I welcome all contributions from the different stakeholders," Gabriel Bernardino, chairman of Eiopa, said.