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.
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Comment Due Date: September 30, 2019
Keywords: Europe, EU, Insurance, Reinsurance, Solvency II, Opinion, Supervision, Remuneration Principles, Proportionality, Supervisory Convergence, Operational Risk, EIOPA
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