Solvency II

Risk Dashboard: European insurers’ risk levels remain broadly stable

Retrieved on: 
Friday, May 7, 2021
Capital requirement, Finance, Money, Insurance, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Personal finance, Solvency II, Bond, Pension, Risk

The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on the fourth quarter of 2020 Solvency II data.

Key Points: 
  • The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on the fourth quarter of 2020 Solvency II data.
  • The results show that insurers exposures to macro risks remain at high level while all other risk categories remain at medium level.
  • The European supervisors expect an increase in credit risks over the next 12 months, reflecting concerns over corporate indebtedness.
  • Financial markets remain broadly stable, amid an increase in bond volatility and concern over commercial real estate investments.

EIOPA publishes monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures – end-April 2021

Retrieved on: 
Thursday, May 6, 2021
Capital requirement, Personal finance, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Finance, Solvency II, RFR, Money, Pension, Risk, Magazines

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published technical information on the relevant risk free interest rate term structures (RFR) with reference to the end of April 2021.

Key Points: 
  • Today, the European Insurance and Occupational Pensions Authority (EIOPA) published technical information on the relevant risk free interest rate term structures (RFR) with reference to the end of April 2021.
  • Background

    Technical information relating to risk-free interest rate (RFR) term structures is used for the calculation of the technical provisions for (re)insurance obligations.

  • In line with the Solvency II Directive, EIOPA publishes technical information relating to RFR term structures on a monthly basis via a dedicated section on EIOPA's Website also containing the release calendar for 2021, the RFR Technical Documentation, the RFR coding and Frequently Asked Questions.
  • With this publication, EIOPA ensures consistent calculation of technical provisions across Europe.

Best’s Special Report: EIOPA’s Solvency II Proposals Seek to Reform a Very Particular Regime

Retrieved on: 
Thursday, February 11, 2021
Professional services, Insurance, Finance, Capital requirement, Insurance regulation, Solvency II, European Insurance and Occupational Pensions Authority, Insurance, Business law, Finance, Government, Own risk and solvency assessment

A new report by AM Best, A Very Particular Regime EIOPAs Solvency II Review Advice, examines some of the Solvency II reform proposals put forward by the European Insurance and Occupational Pensions Authority (EIOPA) and outlines the implications for European insurance companies.

Key Points: 
  • A new report by AM Best, A Very Particular Regime EIOPAs Solvency II Review Advice, examines some of the Solvency II reform proposals put forward by the European Insurance and Occupational Pensions Authority (EIOPA) and outlines the implications for European insurance companies.
  • AM Best highlights in the report that EIOPAs proposals make a start in reforming the often-uneconomic nature of these discount rates.
  • EIOPAs proposals to lower discount rates are expected to have a clearly visible impact in reducing available capital under Solvency II, most particularly for life insurers in Germany and the Netherlands.
  • While EIOPAs advice, if implemented, would have the disadvantage of adding to complexity in the regime, AM Best's believes the proposals make a start in moving Solvency II somewhat closer to providing an economic picture of insurers.

Risk Dashboard: European insurers’ macro risk exposures decreased, while concerns going forward remain

Retrieved on: 
Tuesday, February 9, 2021
Capital requirement, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Finance, Money, Macro risk, Solvency II, Insurance, Risk, Own risk and solvency assessment

The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on the third quarter of 2020 Solvency II data.

Key Points: 
  • The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on the third quarter of 2020 Solvency II data.
  • The results show that insurers exposures to macro risks decreased from very high to high level, while all other risk categories remain at medium level.
  • With regards to macro risk, Gross Domestic Product (GDP) growth forecasts, amid upward revisions, show the strongest expected decline in the last quarter of 2020 and the first recovery in the second quarter of 2021.
  • Financial markets positively reacted to the Covid-19 vaccine news in the second half of 2020 with market and credit risk indicators stabilising.

EIOPA publishes annual report on the use of capital add-ons under Solvency II

Retrieved on: 
Thursday, January 28, 2021
Solvency II, European Insurance and Occupational Pensions Authority, Finance, Financial services, Money, Insurance, Capital requirement, Own risk and solvency assessment, Gabriel Bernardino

The European Insurance and Occupational Pensions Authority (EIOPA) published today its annual Report on the use of capital add-ons during 2019.

Key Points: 
  • The European Insurance and Occupational Pensions Authority (EIOPA) published today its annual Report on the use of capital add-ons during 2019.
  • The objective of the capital add-on measure is ensure that the regulatory capital requirements reflect the risk profile of the undertaking or of the group.
  • During 2019, nine NCAs have set capital add-ons to 19 solo undertakings, out of 2816 (re)insurance undertakings under the scope of the Solvency II Directive in the European Economic Area and the UK.
  • The amount of capital add-ons imposed on undertakings using the standard formula remains very low overall in 2019, accounting for less than 0.5% of the total Solvency Capital Requirement (SCR).

Best’s Commentary: Revised Solvency Management Rules Should Strengthen China’s Insurance Industry

Retrieved on: 
Wednesday, January 27, 2021
Insurance, Professional services, Capital requirement, Types of insurance, Captive insurance, Offshore finance, Insurance, Finance, Money, Insurance regulation, Solvency II, Own risk and solvency assessment

AM Best views the announced changes to the solvency management of Chinas insurance sector as a positive step, particularly in the reinforcement of balance sheet strength and the development of enterprise risk management.

Key Points: 
  • AM Best views the announced changes to the solvency management of Chinas insurance sector as a positive step, particularly in the reinforcement of balance sheet strength and the development of enterprise risk management.
  • In its new Bests Commentary, China Revises Solvency Management Rules to Strengthen Industry Capitalisation, AM Best notes that the revised rules will also form the foundation for the regulators upcoming release of technical adjustments to insurers solvency calculation as part of the wider China Risk-Oriented Solvency System Phase II implementation.
  • With the updated regulations, the CBIRC has defined the accountability of insurance companies directors and senior executives toward their companies capital management practices.
  • Insurance groups, captive insurers, mutual companies and onshore branches of foreign insurance companies also are subject to the updated capital management regulations.

Solvency II review: A balanced update for challenging times

Retrieved on: 
Friday, December 18, 2020
Capital requirement, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Solvency II, R (Vodafone Ltd) v Secretary of State for Business, Enterprise and Regulatory Reform, Government, Business law, Finance, Own risk and solvency assessment, Pan-European Pension

The European Insurance and Occupational Pensions Authority (EIOPA) submitted today to the European Commission itsOpinion on the Solvency II 2020 Review.

Key Points: 
  • The European Insurance and Occupational Pensions Authority (EIOPA) submitted today to the European Commission itsOpinion on the Solvency II 2020 Review.
  • The measures proposed aim at keeping the regime fit for purpose by introducing a balanced update of the regulatory framework, reflecting better the economic situation and completing the missing elements from the regulatory toolbox.
  • The proposals from EIOPA include the following:

    EIOPA also recommends to introduce a new process for applying and supervising the principle of proportionality.

  • The undertakings complying with such criteria will be able, after a notification, to apply automatically a number of proportionality measures.

Milliman updates Claim Variability Benchmarks with valuable industry data for P&C insurers

Retrieved on: 
Thursday, December 17, 2020
Benchmark, Solvency II, International Financial Reporting Standards, Business, Economy

Additional benchmarks are provided to help measure the correlation of experience between various lines of business.

Key Points: 
  • Additional benchmarks are provided to help measure the correlation of experience between various lines of business.
  • The new system also adds both Mack and Merz- Wthrich distributions to aid insurers working with Solvency II and IFRS-17 reporting.
  • Ken Scalf, reserving products manager at Milliman, said, "Our CVB solution is specifically designed to help our clients, and insurers of all sizes, better understand their data and compare their trends and results to industry benchmarks.
  • The Claim Variability Benchmarks solution is an Excel add-in that puts the power of a variety of leading edge benchmarks at your fingertips.

EIOPA updates representative portfolios to calculate volatility adjustments to the Solvency II risk-free interest rate term structures for 2021

Retrieved on: 
Thursday, December 17, 2020
Finance, Money, Capital requirement, Financial regulation, Personal finance, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Solvency II, Probability of default, Pension, Own risk and solvency assessment

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published updated representative portfolios that will be used for calculation of the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II.

Key Points: 
  • Today, the European Insurance and Occupational Pensions Authority (EIOPA) published updated representative portfolios that will be used for calculation of the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II.
  • EIOPA will start using these updated representative portfolios for the calculation of the VA end of March 2021, which will be published at the beginning of April 2021.
  • The updated portfolios enable more accurate reflection of the impact of market volatility under the Solvency II framework.
  • EIOPA is revising the representative portfolios on a yearly basis with the next update being scheduled for the end of 2021 according to art.

EIOPA launches discussion paper on a methodology for integrating climate change in the standard formula

Retrieved on: 
Wednesday, December 2, 2020
Capital requirement, Actuarial science, Insurance, Finance, Money, European Insurance and Occupational Pensions Authority, European Union, Insurance regulation, Catastrophe, Solvency II, Risk, Own risk and solvency assessment

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published a discussion paper on a methodology for the potential inclusion of climate change in the Solvency II standard formula when calculating natural catastrophe underwriting risk.

Key Points: 
  • Today, the European Insurance and Occupational Pensions Authority (EIOPA) published a discussion paper on a methodology for the potential inclusion of climate change in the Solvency II standard formula when calculating natural catastrophe underwriting risk.
  • The frequency and severity of natural catastrophes is expected to increase due to climate change.
  • To ensure the financial resilience of (re)insurers covering natural catastrophes, the solvency capital requirements for natural catastrophe underwriting risk need to remain appropriate in light of climate change.
  • In line with that, EIOPA proposes different methodological steps and process changes to integrate climate change in the calculation of natural catastrophe risk and invites all interested stakeholders to provide comments by 26 February 2021.