EIOPA Report Examines Use of Limitations and Exemptions in Solvency II
EIOPA published a report on the use of exemptions and limitations from regular supervisory reporting, by national competent authorities, under Solvency II, during 2019 and the first quarter of 2020. The report, following the approach taken last year, illustrates the way proportionality is implemented in the reporting reflecting the nature, scale, and complexity of risks inherent to the business, in this case the number of templates reported by different-sized companies. Nearly twice as many templates are reported from large undertakings than from smaller ones for quarterly reporting. On an annual basis, the 10 largest undertakings by total assets had to fill in on average of 36 templates, while the 10 smallest undertakings had to complete only 26 templates in total.
Twelve national competent authorities granted limitations to 833 solo undertakings for the first quarterly reporting in 2020 (compared with 13 national competent authorities and 838 solo undertakings in first quarter of 2019). Regarding annual reporting for solo undertakings, five national competent authorities (five in 2018) granted limitations and exemptions from reporting using the item-by-item templates to 125 solo undertakings in 2019 (136 in 2018). With regard to groups, four national competent authorities (five in the first quarter of 2019) granted limitations and exemptions to 55 groups for the quarterly reporting of 2020 (compared to 37 in the first quarter of 2019) while one national competent authority (two in 2019) granted limitations and exemptions from annual reporting to six groups in 2019 (for six groups in 2018). In 2019, the majority of national competent authorities reported no major changes in granting the authorization to use limitations and exemptions from reporting. Formal policies are not in place and national competent authorities continue to grant limitations and exemptions on a case-by-case basis.
The limitations and exemptions on reporting foreseen in Article 35 of the Solvency II Directive are a concrete proportionality measure in reporting requirements. However, they should not be seen as the only proportionality measure. Reporting requirements also reflect a natural embedded proportionality directly connected to the nature, scale, and complexity of the business. In addition, risk-based thresholds are included in the reporting implementing technical standard.
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Keywords: Europe, EU, Insurance, Solvency II, Proportionality, National Competent Authorities, Reporting, Exemptions, Limitations, EIOPA
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