Supervisory Statements often aim to present finding on current practices observed and indicate areas for improvement. The statements are directed to National Supervisory Authorities (NSAs) as well as insurance and reinsurance undertakings.
Example 1 – Supervisory Statement: EIOPA’s Supervisory Statement - Solvency II: Solvency and Financial Condition Report (2017)
In December 2017, EIOPA published a supervisory statement based on an analysis of solvency and financial condition reports (SFCRs) of (re)insurance undertakings and insurance groups. The statement aims to improve future disclosure of these reports. The analysis was based on a sample of publicly disclosed 2016 SFCRs published by (re)insurance undertakings and insurance groups in the EEA.
EIOPA’s analysis showed that the majority of reports were published on time and in general complied with the Solvency II requirements. Most of the reports were easily accessible on undertakings’ websites. However, EIOPA identified areas where further improvement is needed, regarding the quality of the content of future reports. This includes the following: a more fit-for-purpose summary.
undertaking/group specific information about the own-risk and solvency assessment, better-structured and more-comprehensive information on risk sensitivity to different scenarios or stresses, more-relevant information on bases, methods and main assumptions used for the valuation of assets, liabilities and technical provisions and addressing the uncertainties around valuation, more-comprehensive information of eligible own funds.
EIOPA encourages (re)insurance undertakings and insurance groups to take into account the recommendations outlined in the supervisory statement, considering the principle of proportionality, in the preparation of future reports.
Learn more about the Solvency and Financial Condition Report (SFCR) (ADD LINK after Migration)
Example 2: Supervisory Assessment of the Own Risk and Solvency Assessment (ORSA) (2017) (ADD LINK after Migration)
In June 2017, EIOPA issued a supervisory statement on first experiences with the Own Risk and Solvency Assessment (ORSA) by (re)insurance undertakings. The ORSA is part of the undertakings’ risk management and regulated by Article 45 of the Solvency II Directive.
EIOPA monitored that the majority of (re) insurance undertakings had made good progress in implementing the ORSA process in their internal procedures and reporting lines. However, EIOPA encouraged especially small undertakings to further elaborate on the ORSA process including their ORSA policy and the quality of data used in the assessments. EIOPA also requests undertakings to improve the involvement of their administrative, management or supervisory bodies in this risk assessment exercise as well as to embed the outcome of it in its strategic management decision making. EIOPA stressed that the legal framework requires all undertakings to perform an assessment of their specific risk profile when calculating their overall solvency need, taking into account the proportionality principle. According to EIOPA, the quality of stress testing including reverse stress tests and scenarios used in the ORSA assessments is another area for further improvement.
EIOPA’s analysis was based on the active dialogue with and a survey conducted among the National Supervisory Authorities from each European Union Members State, as well as Iceland, Liechtenstein and Norway.