December 19, 2018

EIOPA published a report on group supervision and capital management of (re)insurance undertakings and on specific topics related to Freedom to Provide Services (FoS) and Freedom of Establishment (FoE) under the Solvency II Directive (2009/138/EC). Based on the findings presented in the report, EIOPA concludes that the tools developed by EIOPA to strengthen group supervision and supervision of cross-border issues contributed to substantial progress in the convergence of practices of national competent authorities, but significant challenges remain.

In the report, EIOPA identifies that effective supervision of insurance groups will benefit from a harmonized approach for early intervention, recovery and resolution, the assessment of group own funds, supervisory colleges, and cross-border business activities provided by groups and solo undertakings through FoS and FoE. EIOPA finds a number of gaps in the regulatory framework that lead to divergent supervisory practices in the following:

  • Definition of intra-group transactions
  • Assessment of availability of eligible own funds at group level
  • Treatment of Insurance Holding Companies and Mixed Activity Insurance Holding Companies in the scope of group supervision
  • Inclusion of holding companies, which are not licensed insurance undertakings in the scope of group supervision
  • Adequate application of the combination of methods to calculate the group solvency requirements
  • Referencing from the Solvency II framework to other financial sectors
  • Application of the mutatis mutandis to groups that fall under the scope of the Solvency II framework

EC is required by Article 242 (2) of the Solvency II Directive to make an assessment of the benefit of enhancing group supervision and capital management under Solvency II. This report is the response to the EC request of June 07, 2018 and is based on the list of specific items that EC identified for the scope of the review.

 

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Keywords: Europe, EU, Insurance, Solvency II, Recovery and Resolution, Early Intervention Measures, EIOPA

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