EIOPA on Use of CAOs and Limitations from Supervisory Reporting
EIOPA published annual reports on the use of exemptions and limitations from the regular supervisory reporting and on the use of capital add-ons by national competent authorities. The report on Capital Add-Ons (CAOs) is published for the first time. The report on exemptions and limitations covers reporting on exemptions for the whole of 2016 and on limitations for the first quarter of 2017.
Insurance and reinsurance undertakings are subject to annual and quarterly reporting. According to the Solvency II Directive, national competent authorities can exempt or limit the submission of the quantitative reporting templates (QRTs), based on criteria such as a defined threshold of the life and non-life market shares in a country, or the size of an undertaking. The report on exemptions and limitations shows that the exemptions from annual reporting concern 134 undertakings and 8 groups while limitations from quarterly reporting concern 703 undertakings and 21 groups. Twenty-one national competent authorities have not authorized any undertaking to use exemptions or limitations, as many of them were planning to collect at least a complete set of annual reporting before taking a decision on the limitations or exemptions. The market share of undertakings benefiting from limitations stays below the maximum of 20% set in the Solvency II Directive.
As at year-end 2016, four member states had imposed 20 CAOs at individual undertaking level and one member state had imposed 4 CAOs at group level. Most CAOs are related to cases where the risk profile of the undertaking deviated significantly from the assumptions underlying the Solvency Capital Requirement calculated under the standard formula. The CAOs set vary from 2% to 85% as part of the total Solvency Capital Requirement of the undertaking. Twenty-two member states implemented a regulation to make use of the option not to disclose capital add-ons for a transitional period.
Related Link: News Release
Keywords: Europe, EU, Insurance, Solvency II, Capital Add-ons, Supervisory Reporting, EIOPA
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