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.
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
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