Featured Product

    EIOPA Welcomes Proposal for IRRD, Revises SII-Related Guidelines

    July 06, 2022

    The European Insurance and Occupational Pensions Authority (EIOPA) published a staff paper that offers an overview of the proposal for an Insurance Recovery and Resolution Directive (IRRD), which was put forward by the European Commission in September 2021. EIOPA also published the revised Guidelines on Valuation of Technical Provisions under Solvency II.

    Paper on IRRD. In its staff paper, EIOPA welcomes the proposal as it addresses all relevant building blocks of a recovery and resolution framework and focuses on cooperation and coordination among authorities. EIOPA believes that the proposal has been fully aligned with the international standards but there are several technical issues that could be subject to debate (for example, on how the tools will work in practice). The key elements of the proposed IRRD are as follows:

    • Single comprehensive framework across the European Union seeking to minimize the potential impact on policyholders and the stability of the system as a whole in case of insurance failure. 
    • Preventive planning as a fundamental element of the framework with the underlying idea that crisis prevention is less expensive and more effective than crisis management.
    • Resolution authorities are proposed to be appointed; these authorities should be equipped with a minimum harmonized set of powers, will be in charge of undertaking all the relevant preparatory and resolution actions, and are expected to have specialized knowledge on the insurance undertaking, the insurance market, the possibilities for winding down insurers and the interconnectedness with other undertakings or other parts of the financial sector.
    • Resolution objectives proposed to be considered are the protection of policyholders, the maintenance of financial stability, the continuation of critical functions, and the protection of public funds.
    • Clear conditions for resolution and adequate safeguards in line with international standards have been proposed.
    • A broad range of proposed resolution tools will provide authorities with flexibility to reach an optimal solution in any situation.
    • Resolution colleges addressing the need for cooperation and coordination among authorities will ensure a successful resolution process, particularly in cross-border cases.

    Guidelines on Valuation of Technical Provisions. During the 2020 review of Solvency II, EIOPA identified several divergent practices regarding the valuation of best estimate. In accordance with Article 16 of Regulation (No 1094/2010), EIOPA issued the revised guidelines on how insurance and reinsurance undertakings should apply the requirements of Solvency II Directive and the Commission Delegated Regulation (No 2015/35) on best estimate valuation. The revised guidelines apply to both individual undertakings and mutatis mutandis at the level of the group. The revision introduced new guidelines and amended current guidelines on topics including the use of future management actions and expert judgment, the modeling of expenses and the valuation of options and guarantees by economic scenarios generators and modeling of policyholder behavior. The revised guidelines do not deviate from the previous guidelines and only add additional details compatible with the high-level guidance included in the previous guidelines. The revised guidelines will be applicable from January 01, 2023.

     

    Related Links


    Keywords: Europe, EU, Banking, Insurance, Solvency II, IRRD, Resolution Planning, Insurance Recovery and Resolution Directive, Resolution Framework, Reinsurance, EIOPA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582