EIOPA published an opinion on the relocation of (re)insurance undertakings from the UK. In this opinion, EIOPA offers principles on supervisory approach to relocations from the UK. The opinion is addressed to the national competent authorities of the EU member states. It applies to the authorization processes and ongoing supervision of undertakings falling under the Solvency II framework.
In this opinion, EIOPA provides certain principles on granting authorization and approvals, governance and risk management, the outsourcing of critical and important activities, and the ongoing supervision of Solvency II. The supervisors will ensure a sound authorization process, supported by adequate resources to deal with the increased amount of requests for authorization within a short period of time. The supervisors will carefully scrutinize any transfer of risks and require a minimum retention of risks from the authorized undertaking. EIOPA stressed that outsourcing of undertakings’ important functions is subject to the full responsibility of the administrative, management, or supervisory body for the outsourced activity and that outsourcing shall not materially impair the quality of governance, increase operational risk, impair the ability of supervisors to monitor compliance, or undermine continuous and satisfactory service to policyholders. EIOPA advised supervisors to install appropriate monitoring tools to assess existing and arising risks and to conduct specific supervisory review in the course of the first years following authorization to ensure the consistency with the initial business model. The opinion is intended to foster supervisory convergence and consistency in the authorization process across the EU members states.
Related Link: Opinion on Supervisory Convergence (PDF)
Keywords: EIOPA, Europe, UK, Brexit, Supervisory Convergence, Insurance, Solvency II
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