EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020. The Solvency II Directive, which came into effect in 2016, sets out harmonized, risk-based rules across EU for insurance companies and promotes transparency, comparability, and competitiveness in the sector. To ensure that these rules are still fit for purpose, EC is comprehensively reviewing the prudential framework, building on the experience gained over the past few years. This review is also an opportunity to see how the insurance sector can contribute to the objectives of the European Green Deal and the Capital Markets Union, along with the overall efforts of EC to ensure the EU economic recovery following COVID-19 crisis. EC also published an impact assessment on the review of Solvency II.
In February 2019, EC had sent a formal request for advice to EIOPA. Following the request for advice, EIOPA conducted three technical consultations covering the 19 topics of the Solvency II review that were identified by EC. In parallel to the work of EIOPA on the review, EC intends to collect feedback from a wider audience, including policyholders, consumer associations, and financial market stakeholders, by conducting its own consultation on the review. This more general consultation covers four main areas:
- Long-termism and sustainability of insurer activities and priorities of the European framework
- Proportionality of the European framework and transparency toward the public
- Possibilities to improve citizens’ trust, to deepen the single market in insurance services and to enhance policyholder protection and financial stability
- New emerging risks and opportunities, such as climate and environment-related risks, digitalization and cyber risks, that may need to be addressed by the European framework
The results of the present consultation will complement the one resulting from technical consultations of EIOPA. They will all feed into the EC review process of the Solvency II framework. On the basis of feedback received, EC will come forward with a legislative proposal in the Summer of 2021.
Related Links
Comment Due Date: October 21, 2020
Keywords: Europe, EU, Insurance, Reinsurance, Solvency II, European Green Deal, COVID-19, Digitalization, Climate Change Risk, ESG, EC, EIOPA
Featured Experts
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
JFSA Defers Final Two Phases of Margin Rules for OTC DerivativesRelated Articles
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
