EIOPA Submits Second and Final Advice for Review of SCR Calculation
EIOPA submitted its second and final set of Advice to EC on the standard formula for the Solvency Capital Requirement (SCR) under Solvency II. This final Advice follows an EIOPA consultation that came out in November 2017 and ended on January 05, 2018. EIOPA had submitted the first set of Advice to EC in October 2017.
The Advice is accompanied by a full impact assessment, which considers the overall impact of both sets of Advice and provides an assessment of the components of this second Advice. EIOPA recommends:
- Further simplifications and improvements to the calculation of capital requirements
- Mixture of revised calibrations, simplifications and, where needed, proposals to achieve greater supervisory convergence
- Further simplification of calculations for natural, man-made, and health catastrophes, particularly fire risk and mass accident, along with simplification of the treatment of look-through to underlying investments
- Regarding the treatment of unrated debt and unlisted equity—objective criteria, such as financial ratios, when these important asset classes can be given the same treatment as rated debt and listed equity
- New calibrations that take recent evidence, such as negative rates, into account, in the area of calculation of interest rate risk
EC had asked EIOPA to provide technical advice as part of its review of the SCR. EC had expressed its intention to review methods, assumptions, and standard parameters used when calculating the SCR with the standard formula. This review is to be performed before December 2018.
Related Links
Keywords: Europe, EU, Insurance, Solvency II, SCR Formula, Advice, EC, EIOPA
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
SEC Proposes Rule on Risk Mitigation Techniques for Uncleared SBSRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.