EIOPA Publishes Statement on Own Risk and Solvency Assessment
EIOPA published a paper that sets out the strategic approach to a comprehensive risk-based and preventive framework for conduct of business supervision on a European level. For supervision in this context, EIOPA plans to rely as much as possible on available data. If needed, EIOPA will target a streamlined process, for data collection to avoid multiple data collections within a short timeframe, and make use of data that is already or will be available on a regular basis (for example, under the Solvency II reporting framework for lines of business level information). EIOPA also published a supervisory statement on the Own Risk and Solvency Assessment (ORSA) in the context of COVID-19 pandemic. The statement is accompanied with the resolution of comments from the public consultation, the feedback statement to stakeholders and the impact assessment that was developed based on the input provided during the consultation period.
The aim of the supervisory statement on ORSA is to promote supervisory convergence, to focus on supervision of the internal processes of undertakings (as necessary for a good quality ORSA), and to guide undertakings through supervisory expectations under the situation triggered by the COVID-19 pandemic. EIOPA expects that most of the undertakings have captured the impact of the pandemic in their ORSA by now, as some national supervisory authorities have already issued guidance to reflect the pandemic situation in the ORSA. This statement guides undertakings through supervisory expectations under the current situation caused by the COVID-19 pandemic, while considering that the impact on each undertaking can differ, depending on its risk profile. The statement addresses the pandemic situation, though the recommendations therein are applicable to any similar situation with the necessary adaptations. ORSA is a risk management tool that sets out the principles of forward-looking self-assessment of risk management and solvency for insurers and reinsurers. The performance of an ORSA under the current circumstances is intended to give insight into the potential impact of the COVID-19 pandemic on the undertaking’s risk profile to support the decision making by their administrative, management, or supervisory body (AMSB). In addition, it promotes the identification and effective management of the undertakings’ risks to ensure they have sufficient capital to absorb possible losses and help steer their business through periods of adversity. ORSA is relevant for undertakings that are within the scope of Solvency II.
Related Links
- News Release on Business Conduct Strategy
- Business Conduct Supervision Strategy (PDF)
- News Release on ORSA
- Supervisory Statement on ORSA (PDF)
- Resolution of Comments (PDF)
- Feedback Statement (PDF)
- Impact Assessment (PDF)
Keywords: Europe, EU, Insurance, Solvency II, ORSA, Supervisory Convergence, Conduct Risk, Solvency Capital Requirement, SCR, COVID-19, EIOPA
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