EIOPA Publishes Annual Report for 2019
EIOPA published its annual report, which sets out the activities and achievements of the past year. During 2019, EIOPA continued to build a consistent approach to supervision and promote consistent supervisory practices through the implementation of its supervisory convergence plan, with priority given to proportionality, the supervision of internal models, and the supervision of cross-border business. EIOPA also continued the work on cross-cutting themes of sustainable finance and insurtech, digitalization, and cyber resilience, including a further investigation into the cyber insurance market in Europe. The annual report also indicates strategic focus for the coming year in the areas of review of Solvency II and management of climate change, interest rate, and money laundering risks. Looking ahead, EIOPA will continue to focus on the financial stability of the insurance and pensions sector by supporting EC initiatives to deliver the European green deal, a Europe fit for the digital age, and an economy that works for the people.
The annual report highlights that, in 2019, EIOPA undertook considerable work as part of the 2020 review of Solvency II to ensure that the landmark regulation remains fit for purpose. The 2020 review is an opportunity to fine-tune the regime to ensure that it is more proportionate to the scale and complexity of risks insured by different types of insurers and creates better conditions for insurers to develop new sound business models. It is also an opportunity to complete the EU regulatory toolbox by introducing a macro-prudential dimension and a minimum harmonization regarding recovery and resolution and insurance guarantee schemes. In July 2019, EIOPA launched a consultation on its Advice on the harmonization of national insurance guarantee schemes across the member states of EU. EIOPA called for the establishment of a European network of national insurance guarantee schemes, which are sufficiently harmonized, based on the home-country principle, and adequately funded. The public consultation ended in October 2019 and currently EIOPA’s advice is being drafted and the final Advice will be included in the 2020 Solvency II Review Opinion.
The annual report also highlighted that regulation on sustainability-related disclosures in the financial services sector (SFDR) empowers the ESAs to deliver, through the Joint Committee of ESAs, six technical standards, of which five are due by the end of 2020. These technical standards will cover both adverse impact reporting at entity level and pre-contractual, website, and periodic product disclosure. Against this background, it was decided to set up a new sub-group on environmental, social and governance (ESG) disclosures to develop these draft technical standards. The group has progressed toward developing a draft paper for consultation in 2020 and this paper is expected to be finalized by the end of 2020.
In 2019, EIOPA increased efficiency across its functions, particularly in administrative processes through the implementation of e-solutions. It also embarked on several joint initiatives and will continue to do so, such as EIOPA has recently begun reviewing its data collection and analysis capabilities and is actively investigating synergies with European institutions. In this context, it is worth noting that the recently approved IT Strategy 2019-2023 calls for collaboration and interoperability as its first IT principle. This includes fostering close partnerships with counterparts in the national competent authorities and the EU institutions to align requirements and implementation, actively promoting synergies between the ESAs, and making informed decisions on which systems can be shared. Additionally, EIOPA worked on two additional peer reviews—the regular supervisory report and the decision on collaboration by insurance supervisory authorities. The results of these peer reviews are expected to be published in 2020.
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Keywords: Europe, EU, Insurance, Solvency II, ESG, Climate Change Risk, Sustainable Finance, Proportionality, Supervisory Convergence, Annual Report, Insurtech, SFDR, EIOPA
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