EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020. The Solvency II Directive, which came into effect in 2016, sets out harmonized, risk-based rules across EU for insurance companies and promotes transparency, comparability, and competitiveness in the sector. To ensure that these rules are still fit for purpose, EC is comprehensively reviewing the prudential framework, building on the experience gained over the past few years. This review is also an opportunity to see how the insurance sector can contribute to the objectives of the European Green Deal and the Capital Markets Union, along with the overall efforts of EC to ensure the EU economic recovery following COVID-19 crisis. EC also published an impact assessment on the review of Solvency II.
In February 2019, EC had sent a formal request for advice to EIOPA. Following the request for advice, EIOPA conducted three technical consultations covering the 19 topics of the Solvency II review that were identified by EC. In parallel to the work of EIOPA on the review, EC intends to collect feedback from a wider audience, including policyholders, consumer associations, and financial market stakeholders, by conducting its own consultation on the review. This more general consultation covers four main areas:
- Long-termism and sustainability of insurer activities and priorities of the European framework
- Proportionality of the European framework and transparency toward the public
- Possibilities to improve citizens’ trust, to deepen the single market in insurance services and to enhance policyholder protection and financial stability
- New emerging risks and opportunities, such as climate and environment-related risks, digitalization and cyber risks, that may need to be addressed by the European framework
The results of the present consultation will complement the one resulting from technical consultations of EIOPA. They will all feed into the EC review process of the Solvency II framework. On the basis of feedback received, EC will come forward with a legislative proposal in the Summer of 2021.
Related Links
Comment Due Date: October 21, 2020
Keywords: Europe, EU, Insurance, Reinsurance, Solvency II, European Green Deal, COVID-19, Digitalization, Climate Change Risk, ESG, EC, EIOPA
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
ECB Consults on Supervisory Approach to Consolidation in BankingRelated Articles
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
HKMA Announces Repayment Deferment Under Payment Holiday Scheme
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS Announces Key Initiatives to Support Adoption of SORA
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA to Extend Temporary High Balance Coverage Amid COVID Crisis
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC Sets Out Updated Technical Information for Solvency II Calculations
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.
