BaFin published an "interpretation decision" related to the Solvency II supervisory regime and this decision is addressed to all insurers subject to the Solvency II supervisory regime. The decision makes the clarifications about how insurance companies should examine the appropriateness of the valuation methodology for insurance reserves.
The interpretation decision addresses, inter alia, the notion of "error" used in Article 56 (2) of Regulation (EU) 2015/35 on Solvency II, which plays a central role in assessing the adequacy of the method. It also highlights the consequences of applying Article 56 to other areas as well as specifics of application for life assurance obligations. Within the Solvency II framework, actuarial provisions must be formed for all insurance obligations to policyholders and beneficiaries. The methods used to calculate the provisions must be appropriate in relation to the nature, extent, and complexity of the risks underlying the insurance obligations. When determining an appropriate method of calculation, undertakings shall carry out an audit in accordance with Article 56 of Delegated Regulation (EU) 2015/35. In doing so, entities should examine risks of the underlying obligations and assess errors in the results of the method that may result from differences between the underlying assumptions of the method and the risks identified.
Related Links (in German)
Keywords: Europe, Germany, Insurance, Solvency II, Interpretation Decision, Underwriting Provisions, BaFin
Previous ArticleFCA Publishes Feedback on Smarter Digital Regulatory Reporting
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.
FFIEC, on behalf of its members that include US Agencies such as CFPB, FDIC, FED, NCUA, and OCC, issued a joint statement that sets out prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers.
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).