Featured Product

    BaFin on Division of Financial and Traditional Non-Life Reinsurance

    July 18, 2019

    BaFin published an interpretative decision on delineation of financial reinsurance from traditional reinsurance in the non-life sector. Under Article 208 (2), second sentence, of the Delegated Regulation (EU) 2015/35, non-life insurance undertakings may not take into account financial reinsurance business or similar arrangements where the effective risk transfer is similar to a financial reinsurance transaction, provided that the volume measures for the premium and provision risk determine or calculate appropriate company-specific parameters. They must, therefore, distinguish financial reinsurance from traditional reinsurance. The interpretative decision is to be applied to all insurance companies domiciled in Germany and to branches of third-country insurance undertakings operating in the non-life insurance business.

    In the area of non-life insurance, the expected loss of the reinsurer (Expected Reinsurer's Deficit or ERD) is used as a measure of risk transfer when differentiating financial reinsurance from inadequate risk transfer. A sufficient transfer of risk exists if the absolute amount of the expected loss of the reinsurer amounts to at least 1% of the expected premium. It makes sense to use ERD for the distinction between financial reinsurance and traditional reinsurance. In any case, in the field of non-life insurance, the Federal Agency assumes traditional reinsurance if the absolute amount of the expected loss of the reinsurer amounts to 2.5 percent or more of the expected premium. However, the provisions on the demarcation of financial reinsurance from inadequate risk transfer remain unaffected by the interpretative decision.

     

    Related Links (in German)

    Keywords: Europe, Germany, Insurance, Reinsurance, Financial Reinsurance, Traditional Reinsurance, Non-Life Insurance, Risk Transfer, Solvency II, BaFin

    Featured Experts
    Related Articles
    News

    APRA Consults to Standardize Submission Date for Quarterly Reporting

    APRA proposed to standardize quarterly reporting due dates for authorized deposit-taking institutions. The proposed standardized due date is 35 calendar days after the last day of the reference quarter, which will create a 14-calendar-day extension for credit unions and building societies.

    November 08, 2019 WebPage Regulatory News
    News

    EBA Publishes Methodology and Draft Templates for Stress Tests in 2020

    EBA published a package for the 2020 EU-wide stress test exercise for banks.

    November 07, 2019 WebPage Regulatory News
    News

    FSB Publishes Summary of Plenary Meeting in Paris

    At the meeting, the Plenary reviewed vulnerabilities in the global financial system, fintech developments (including developments in the crypto-asset markets), ongoing work of FSB, and the work program for 2020.

    November 07, 2019 WebPage Regulatory News
    News

    EC Publishes Results of Fitness Check of Reporting Requirements in EU

    EC published results of the fitness check of supervisory reporting requirements in financial services legislation in EU.

    November 07, 2019 WebPage Regulatory News
    News

    BCBS Assesses NSFR and LE Rules in Argentina and China as Compliant

    BCBS published reports that assess the implementation of net stable funding ratio (NSFR) and large exposures, or LE, framework in Argentina and China.

    November 07, 2019 WebPage Regulatory News
    News

    HKMA Highlights Technology Initiatives at the Hong Kong FinTech Week

    HKMA co-organized, with InvestHK, the Hong Kong FinTech Week 2019, which was a five-day flagship fintech event that attracted thousands of attendees worldwide.

    November 06, 2019 WebPage Regulatory News
    News

    ECB Report on Fallback Provisions in Contracts Referencing EURIBOR

    ECB published a report, by private sector working group on euro risk-free rates, presenting recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR.

    November 06, 2019 WebPage Regulatory News
    News

    EC Regulation on Homogeneity of Underlying Exposures in Securitization

    EC published the Delegated Regulation 2019/1851 regarding the regulatory technical standards on the homogeneity of the underlying exposures in securitization.

    November 06, 2019 WebPage Regulatory News
    News

    FSI Examines Regulatory Approaches on Climate Risk Assessment

    The Financial Stability Institute (FSI) of BIS published a paper that examines the regulatory approaches being used for climate risk assessment in the insurance sector, in particular through enterprise risk management (ERM) frameworks.

    November 06, 2019 WebPage Regulatory News
    News

    SRB Launches Q&A Process for Resolution Reporting

    SRB has setup a dedicated solution for raising questions on the resolution reporting.

    November 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4112