EIOPA Consults on Supervision of Remuneration Principles in Insurance
EIOPA launched a consultation on its opinion on the supervision of remuneration principles in the insurance and reinsurance sectors. The draft opinion, addressed to national supervisory authorities, provides guidance on how to challenge the application of these principles and focuses on a reduced scope of staff identified as potential higher profile risk-takers to promote a proportionate approach. The opinion also identifies benchmarks that should trigger the supervisory dialog and should not be seen as hard targets for the practical implementation of the remuneration principles. Feedback is requested by September 30, 2019.
The remuneration principles set out in Article 275 of the Commission Delegated Regulation (EU) 2015/35 leave considerable discretion to the undertakings and supervisory authorities. Therefore, divergent practices have emerged across EU. EIOPA intends to build a common supervisory culture through the convergence of national supervisory practices. The opinion aims to enhance convergence in the supervision of remuneration policies of insurance and reinsurance undertakings at the European level, without prejudice to the application of the relevant provisions of the Solvency II Directive and the Delegated Regulation.
EIOPA intends not to add requirements or to create administrative burden. Risk-based supervision of the remuneration policy means that the national supervisory authorities should have a two-dimensional approach when assessing the risk. The first dimension being the undertakings' overall risk profile and the second dimension being the design of the concrete remuneration policy that might be identified as being more risky than others. National supervisory authorities may adopt a proportionate and more flexible approach in the supervision of the remuneration principles when undertakings are categorized as "low risk." EIOPA will consider the feedback received and expects to publish a final report on the consultation, along with the final opinion.
Related Links
Comment Due Date: September 30, 2019
Keywords: Europe, EU, Insurance, Reinsurance, Solvency II, Opinion, Supervision, Remuneration Principles, Proportionality, Supervisory Convergence, Operational Risk, EIOPA
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Related Articles
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
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 Bulletin Examines Key Elements of Policy Response to Cyber Risk
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.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
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.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
SRB Chair Outlines Work Priorities for 2021
The SRB Chair Elke König published an article setting out work priorities for 2021.
FDIC Selects Companies to Compete in Final Phase of Tech Sprint
FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.
