EIOPA issued an opinion on the solvency position of insurers in light of the withdrawal of the UK from the EU (or Brexit). The aim of the opinion is to call on national supervisory authorities to ensure that insurers properly address all risks to their solvency position in light of Brexit.
National supervisory authorities should ensure that the insurance and reinsurance undertakings under their supervision identify, measure, monitor, manage and report the risks arising from the UK becoming a third country and include them in their own risk and solvency assessment. Furthermore, national supervisory authorities should assess the risks affecting their national markets and, where necessary, take preventive supervisory actions. The opinion sets out 14 areas in which the determination of the solvency position of insurers will change. The areas include the risk-mitigating impact of derivatives, the recognition of ratings from UK rating agencies, and the regulatory treatment of credit risk exposures situated in the UK. Not all of the changes may affect each insurance company.
Brexit might have an impact on the solvency position of insurers. Technical provisions, own funds, and capital requirements of insurance and reinsurance undertakings in member states other than the UK can change when the UK becomes a third country due to changed regulatory requirements. Solvency II and other financial regulation distinguish between activities in and outside of the EU.
Keywords: Europe, EU, UK, Insurance, Solvency II, Brexit, Opinion, EIOPA
Previous ArticleAgustín Carstens of BIS Speaks About New Role of Central Banks
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.
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.
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.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
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.
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.
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.