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 announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
EIOPA published its risk dashboard based on Solvency II data from the fourth quarter of 2019.
MNB published a statement on loan payments post the announced moratorium, in addition to a set of new questions and answers (Q&A) on supervisory measures and requirements announced amid COVID-19 pandemic.
EBA updated the Single Rulebook question and answer (Q&A) tool for banks.
US Agencies (FDIC, FED, and OCC) published an interim final rule that temporarily revises the supplementary leverage ratio calculation for depository institutions.