EIOPA published annual report on the use of exemptions and limitations from the regular supervisory reporting during 2018 and the first quarter of 2019 by the national competent authorities under Solvency II. The report addresses the issue of proportionality of reporting requirements. The limitations and exemptions set out in Article 35 of the Solvency II Directive are a concrete proportionality measure in reporting requirements, but should not be seen as the only proportionality measure. The EIOPA survey finds that the market share of undertakings that are allowed limited quarterly reporting is far from the 20% market share allowable under the Solvency II Directive.
To evidence how proportionality is implemented in quarterly reporting, reflecting the nature, scale, and complexity of the risks inherent to the business, this report uses two examples. These examples are the look-through reporting of collective investment undertakings for unit-linked contracts and the number of templates used by different-sized companies. The report shows that 13 competent authorities granted limitations to 838 solo undertakings for first quarterly reporting in 2019 (compared to 791 solo undertakings in the first quarter of 2018) while 5 national authorities (5 in 2017) granted limitations and exemptions from reporting using item-by-item templates to 136 solo undertakings for annual reporting in 2018 (139 in 2017).
With regard to the number of templates provided by small, medium-size, or large insurance undertakings, more quarterly information is required from large undertakings, which need to fill in on average nine templates, nearly twice as many templates as small undertakings, which had to fill in five templates on average. In case of annual reporting, the 10 largest undertakings by total assets have to complete 36 templates as opposed to the 26 templates completed by the 10 smallest undertakings. Overall, this suggests that proportionality is embedded more in quarterly reporting than in annual reporting and, therefore, additional risk-based thresholds are needed (as to be proposed by EIOPA in the 2020 review).
This report is based on information submitted to EIOPA by national competent authorities via the quantitative reporting templates and an additional survey. The information covers exemptions from solo and group annual reporting, limitations on both solo and group quarterly reporting. The quantitative information is obtained from the reporting templates Solvency Capital Requirement (SCR) Own Funds template (S.23.01); Gross Written Premiums (GWP) from the Premiums, claims, and expenses by line of business template (S.05.01); technical provisions from the Balance sheet template (S.02.01); and Total assets from the Balance sheet template (S.02.01). The survey was conducted by EIOPA among national supervisors from the 31 European Economic Area members, including the EU member states, on the usage of limitations and exemptions. EIOPA received answers from all national supervisors, with the majority of national competent authorities in this survey confirming that they grant exemptions on a case-by-case basis.
Keywords: Europe, EU, Insurance, Solvency II, Limitations and Exemptions, Reporting, Proportionality, EIOPA
Previous ArticleECB Releases Results of Supervisory Review and Evaluation for 2019
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA published the annual report on asset encumbrance of banks in EU.
MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.
FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.
EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.