EIOPA Reports Outline Work Done Under EU-US Insurance Dialogue Project
EIOPA published reports summarizing the work of the big data working group, the cyber insurance market group, and the insurer cybersecurity working group under the EU-U.S. Insurance Dialogue Project. The reports summarize the topics under discussion, work done in 2019, and the next steps for discussion and action. The EU-U.S. Insurance Project started in early 2012, when EC, EIOPA, NAIC, and FIO agreed to participate in a deeper dialog project to contribute to an increased mutual understanding and enhanced cooperation between the EU and U.S. to promote business opportunity and effective supervision in EU and U.S. The high-level common objectives of the EU-U.S. Insurance Dialogue are to promote the free flow of information between EU and U.S. supervisors, establish a robust regime for group supervision, achieve a consistent approach within each jurisdiction, and ensure the consistent application of prudential requirements.
The Big Data Working Group has been focusing on the increased use of large data sets (Big Data) by insurers and the use of data analytics in the insurance sector. After discussion, the Working Group has outlined the following areas for potential discussion in 2020/2021:
- The further development of artificial intelligence principles in the U.S. and EU including ethical aspects
- Regulatory review of predictive models, including but not limited to assessing transparency and explainability issues arising from the use of machine learning algorithms.
- Industry use of Big Data for fraud detection and claims settlement
- Continue monitoring developments on third-party vendors and consumer disclosure issues
The Cyber Insurance Working Group, in 2019, as a follow-up to the work done in 2018, continued discussions with a focus on the assessment of non-affirmative cyber risk and the potential for catastrophic losses; the challenges and opportunities of insuring and reinsuring cyber risk; and the availability of cyber insurance data. One of the main challenges to further development of the cyber insurance markets in the U.S. and EU relates to the limited data to appropriately assess and quantify cyber risk exposure. Against this background, themes for further elaboration may include the following:
- Discussing approaches to collect data and develop techniques supporting more sophisticated assessment of cyber risks. including potential accumulation risks (for example, scenario-based stress testing)
- Sharing U.S. and EU approaches relative to cyber incident reporting and cyber incident response best practices, including discussion of whether global initiatives could facilitate further understanding and underwriting of cyber risks
- Discussing the current role and use of risk
The Insurer Cybersecurity Working Group’s 2019 Target Outcome or deliverables included further discussions to continue to share examples and approaches to insurer cybersecurity and post-incident coordination Another outcome involved further discussions in moving forward with creating an outline or template for scenarios for an insurance supervisor-only exercise on how to coordinate a cross-border response in the event of an international cybersecurity incident. Insurance sector cybersecurity is a continuing challenge and a matter for ongoing supervisory focus in both the U.S. and EU. The Insurer Cybersecurity Working Group, therefore, recommends continuing its ongoing work in the following areas:
- Continue to share information on insurer cybersecurity and operational resilience including, for example, discussing insurance industry approaches to managing cybersecurity risk; supervisory approaches to reviewing insurers’ cybersecurity measures; the challenges of tracking cyber risks in the EU and the U.S.; preventing and managing a cross-border cyber event from both a supervisory and industry perspective; and the cybersecurity implications of insurers’ increased outsourcing to the cloud
- Complete development of an initial cybersecurity exercise template for EU and U.S. supervisors on how to coordinate a cross-border response in the event of an international cybersecurity incident
- Expand current draft scenario(s) in the template, including scenario timelines with a progression of events mimicking those likely during a real cybersecurity incident and include a list of supervisory contacts
- Develop a timeline for conducting an exercise using the template created by the working group
Related Links
Keywords: Europe, Americas, EU, US, Insurance, Big Data, Artificial Intelligence, Machine Learning, Cyber Risk, Cyber Insurance, EIOPA
Previous Article
EIOPA Finalizes Methodological Principles for Insurer Stress TestingRelated Articles
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs Publish Reporting Templates for Financial Conglomerates
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.