Q&A

Question

We would like to confirm the interpretation of Article 279 of the Delegated Regulation. The Regulation states in sub (1) that if the modified SCR (calculated if the model would be appropriate) exceeds the SCR without modification by 10% or more […], the supervisory authorities shall conclude that the risk profile of the insurance or reinsurance undertaking deviates significantly from the assumptions underlying the SCR, unless they have strong evidence that this is not the case on the basis of the factors set out in article 276. In sub (2) it is stated that if the modified SCR exceeds the SCR without modification by 15% or more […], the supervisory authorities shall conclude that the risk profile of the insurance or reinsurance undertaking deviates significantly from the assumptions underlying the SCR (regardless of evidence of the contrary). Should this be interpreted as: a) A lower bound for the assessment of significance, meaning that a deviation of less than 10% will never constitute a significant deviation; or b) A lower bound for required action by the supervisor, meaning that if the deviation is 10% or more, this requires the supervisory authority to conclude that the deviation is significant, unless there is strong evidence of the contrary. If the deviation is 15% or higher, the supervisory authority is required to conclude that the deviation is significant, regardless of any of the items in Article 276. If the deviation is less than 10%, based on the factors in Article 276, a supervisory may still conclude that a deviation is significant.

EIOPA answer

In accordance with Article 279 of Commission Delegated Regulation (EU) 2015/35, where a supervisory authority concludes that a deviation of less than 10% is significant, this requires an explicit justification why this is so.

Whereas for a deviation of 10% or more but less than 15%, it suffices to state that there is no strong evidence to the contrary (if this is the case).

For a deviation of 15% or more the supervisory authority only needs to refer to the legal assumption of significance.