Featured Product

    EIOPA Welcomes EC Proposals on Review of Solvency II

    October 01, 2021

    The European Insurance and Occupational Pensions Authority (EIOPA) welcomed the proposals of the European Commission (EC) on the review of Solvency II Directive. The proposals largely share EIOPA’s approach and follow the objectives set in EIOPA’s opinion on the review of Solvency II from December 2020. In particular, EIOPA welcomed the proposals to develop an Insurance Recovery and Resolution Directive, to include the macro-prudential perspective in Solvency II, to enhance the proportionality principle, and to give mandates for further action on sustainable finance. The new extrapolation methodology of the risk-free curve, the adjustments of the interest risk rate, and the additional tools and measures to address systemic risk are also welcome steps.

    From a perspective of consumer protection, EIOPA deeply regrets that the minimum harmonization of the Insurance Guarantee Schemes at the European Union level has not been considered. The review of Solvency II and the newly proposed Insurance Recovery and Resolution Directive constituted an excellent window of opportunity to address the existing fragmentation in the field of Insurance Guarantee Schemes. As a result of the current fragmentation, policyholders receive different levels of protection in the event of an insurer’s failure operating within the European Union, depending on the country from where the insurance policy originates. Consequently, EIOPA continues to believe that this issue needs to be tackled as it may seriously undermine the functioning of and trust in the European Single Market.

    To avoid scenarios that harm policyholders, an important element of Solvency II is its prudence. The EIOPA advice recommended a more favorable but prudent treatment of illiquid liabilities as well as a balanced update overall. In the view of EIOPA, the removal of illiquidity considerations for the purpose of volatility adjustment calculations on the one hand and relaxations regarding the calibration on the risk margin and interest risk capital charge on the other pose potential risks. While EIOPA is pleased with the consideration taken on board that low-risk insurers would be relieved of certain requirements, it is important that the proportionality principle in Solvency II is embedded in the supervisory review process. This approach would give the supervisors more flexibility to allow application by insurers of proportionality also during the supervisory review process. This would keep proportionality as a principle instead of transforming it into a "set of rules." EIOPA states that it stands ready to support the European Commission, Parliament, and Council in the review process.

     

    Related Links

    Keywords: Europe, EU, Insurance, Reinsurance, Solvency II, Sustainable Finance, Resolution Framework, Proportionality, Insurance Guarantee Schemes, Interest Rate Risk, Insurance Recovery and Resolution Directive, Climate Change Risk, EC, EIOPA 

    Featured Experts
    Related Articles
    News

    PRA and FPC Finalize Changes to Leverage Ratio Framework in UK

    The Prudential Regulation Authority (PRA) published the final policy statement PS21/21 on the leverage ratio framework in the UK. PS21/21, which sets out the final policy of both the Financial Policy Committee (FPC) and PRA

    October 08, 2021 WebPage Regulatory News
    News

    CFPB Proposes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) proposed to amend Regulation B to implement changes to the Equal Credit Opportunity Act (ECOA) under Section 1071 of the Dodd-Frank Act.

    October 08, 2021 WebPage Regulatory News
    News

    PRA Decides to Maintain O-SII Buffers for Another Year

    The Prudential Regulation Authority (PRA) decided to maintain, at the 2019 levels, the buffer rates for the Other Systemically Important Institutions (O-SII) for another year, with no new rates to be set until December 2023.

    October 08, 2021 WebPage Regulatory News
    News

    FSB Report Assesses Implementation of Recommendations on Stablecoins

    The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements.

    October 07, 2021 WebPage Regulatory News
    News

    APRA Updates Loan Serviceability Expectations for Home Lending

    In a letter to the authorized deposit taking institutions, the Australian Prudential Regulation Authority (APRA) announced an increase in the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.

    October 06, 2021 WebPage Regulatory News
    News

    CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems.

    October 06, 2021 WebPage Regulatory News
    News

    EBA and EIOPA Set Out Work Priorities for 2022

    The European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) have set out their respective work priorities for 2022.

    October 05, 2021 WebPage Regulatory News
    News

    MFSA Issues Reporting Updates and Guidance for Banks

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0, in addition to the reporting module on leverage under the common reporting (COREP) framework.

    October 05, 2021 WebPage Regulatory News
    News

    EC Publishes Decision on List of Equivalent Third Countries Under CRR

    The European Commission (EC) published the Implementing Decision 2021/1753 on the equivalence of supervisory and regulatory requirements of certain third countries and territories for the purposes of the treatment of exposures, in accordance with the Capital Requirements Regulation or CRR (575/2013).

    October 04, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write-Down and Conversion Powers

    EC published the Implementing Regulation 2021/1751, which lays down implementing technical standards on uniform formats and templates for notification of determination of the impracticability of including contractual recognition of write-down and conversion powers.

    October 04, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7552