Featured Product

    EIOPA Follows Up on Peer Review of Key Supervisory Functions

    August 11, 2021

    The European Insurance and Occupational Pensions Authority (EIOPA) published a follow-up report to the 2018 peer review on the supervisory practices for the application of proportionality principle in governance requirements with respect to the identified key functions and in the context of the Solvency II Directive. The follow-up report assesses how national competent authorities have implemented the recommended actions from the original peer review. The original peer review had assessed how national competent authorities supervise and whether an insurer’s setting of key functions fulfills the legal requirements of Solvency II, with an emphasis on proportionality. Based on the findings of the follow-up exercise, EIOPA concludes that twelve national competent authorities have fully implemented their recommended actions and six national competent authorities have partially implemented the recommended actions addressed to them.

    The areas for which the original peer review had identified recommended actions included supervisory approach of national competent authorities, combinations of key function holders, combinations of key functions with operational tasks, subordination of a key function holder to another key function holder or head of operational department, and outsourcing. To implement the recommended actions in the area of supervisory approach of national authorities, the national authorities have developed or amended their national internal supervisory guidance or supervisory internal guidelines including the guidance for on-site inspections. Some national authorities have changed the registration for notifications of key function holders with regard to content and technical option for submission while others have implemented/amended their internal data collection or documentation tools to allow for a better overview and analysis of information received by supervised undertakings. 

    The follow-up report also addresses the monitoring of how the best practices, as identified in the past peer review, have been considered, implemented, or further developed by the national competent authorities. The review notes that most of these best practices have been taken up by national competent authorities, fostering a coherent and consistent application of supervisory guidance:

    • The majority of national competent authorities have adopted a structured proportionate supervisory approach, including the introduction of a supervisory documentation tool and consistent data submission for key function holders.
    • Most national competent authorities have taken actions to ensure both high-quality supervision for governance issues and the application of the principle of proportionality in a coherent way.
    • Some supervisory measures—in particular the assessment of whether administrative, management or supervisory body members challenge the key function holder who are also an administrative, management or supervisory body member—tend to be applied on a case-by-case approach, especially toward high-risk undertakings.
    • Most national competent authorities meet key function holders on a regular basis as part of their annual supervisory review plan.

    Overall, EIOPA has found that the supervision of key function holders has improved during the last two years; however, in a small number of countries the development of supervisory practices are still in progress. EIOPA invites national competent authorities that have not yet fully implemented the recommended actions to consider the identified examples as inspiration for the development of their national supervisory practices. The six national competent authorities with partially fulfilled recommended actions, are expected to inform EIOPA, within six months of the approval of the follow-up report, about the implementation of the recommended action. This will then close the cycle of this peer review. After the closing of the peer review cycle, EIOPA will use a risk-based approach to monitor national authorities’ full or partial implementation of their recommended actions and will report on progress to the Board of Supervisors. A summary of the findings and any further progress will be included in supervisory activities report of EIOPA. EIOPA will also consider how best practices can be included in EIOPA’s supervisory handbook to foster convergence in the application of the principle of proportionality.


    Related Links

    Keywords: Europe, EU, Insurance, Peer Review, Governance, Proportionality, National Competent Authorities, Insurance Supervision, Solvency II, EIOPA

    Featured Experts
    Related Articles

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699