EIOPA Proposes to Amend Delegated Acts Under Solvency II and IDD
EIOPA published the draft technical advice on possible amendments to the delegated acts under Solvency II and the Insurance Distribution Directive (IDD) with respect to the integration of sustainability risks and factors. EIOPA is seeking stakeholder comments on the draft technical advice developed on the basis of three principles—coherence with current requirements, proportionality, and cross-sectoral consistency. Comments are requested by January 30, 2019.
The proposed amendments to the Solvency II Delegated Regulation are aimed to ensure identification and assessment of sustainability risks in the areas of underwriting and investments. Insurance undertakings shall take into account the potential long-term impact of investment decisions on sustainability factors (stewardship principle) and, where relevant, reflect policyholders' environmental, social, and governance (ESG) preferences.
The proposed draft amendments under the IDD relate to the following two areas:
- Conflicts of interest—When identifying the types of conflicts of interest that might damage the interests of a customer, insurance undertakings and insurance intermediaries should include those that potentially may arise in relation to sustainability. Insurance undertakings and insurance intermediaries should have in place appropriate arrangements to ensure that ESG considerations are included in the advisory process and do not lead to mis-selling practices.
- Product Oversight & Governance—Customers' ESG preferences in the target market shall be considered in various stages of product lifecycle, in case the insurance product is offered to customers seeking insurance products with an ESG profile.
In August 2018, EIOPA had received a request from EC to provide technical advice on potential amendments to, or introduction of, delegated acts under the Solvency II Directive and IDD with regard to the integration of sustainability risks and sustainability factors. The Call for Advice referred particularly to the areas including organizational requirements, operating conditions, risk management, and target market assessment for the IDD only.
Related Links
- Press Release
- Consultation Paper (PDF)
- Survey Questions for Providing Comments
- Letter from EC to EIOPA
Comment Due Date: January 30, 2019
Keywords: Europe, EU, Insurance, Solvency II, IDD, Proportionality, Risk Management, ESG, EC, EIOPA
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