EIOPA launched a consultation paper on its first set of advice to the EC on the Solvency II review. EIOPA invites stakeholders to provide their feedback to the proposed draft advice planned to be submitted to the EC in October 2017. The consultation period ends on August 31, 2017.
The consultation paper includes EIOPA's advice on a number of items that are in the scope of the two calls for advice received from the EC. These items include simplified calculations, reduction in reliance on external credit ratings, treatment of guarantees, exposure guaranteed by a third party and exposures to regional governments and local authorities, risk-mitigation techniques, undertaking specific parameters, look-through approach on investment related vehicles, and information on loss-absorbing capacity of deferred taxes. By the end of this year, EIOPA will issue its second consultation paper with the following items to be reviewed: risk margin, own funds, policy options on loss-absorbing capacity of deferred taxes, catastrophe risks, premium and reserve risks, mortality and longevity risks, counterparty default risk, currency risk at group level, interest rate risk, simplifying look-through, unrated debt, unlisted equity and strategic participations. EIOPA will submit its second set of advice to the EC by February 2018.
The main goals of the review are to ensure a proportionate and technically consistent supervisory regime for (re)insurance undertakings and to look for possible simplifications in the Solvency Capital Requirements standard formula as well as to ensure the proportionate application of the requirements. EC will finalize the first phase of the review by December 2018 while the Solvency II framework will be reviewed by 2021. EIOPA started its review with the discussion paper published in December 2016.
Keywords: Europe, EIOPA, Insurance, Solvency II, EC, SCR Formula
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