On 30 July 2021, the European Insurance and Occupational Pensions Authority (EIOPA) issued a Recommendation to the National Bank of Slovakia (NBS) to take supervisory actions against an undertaking which pursues cross-border business in several countries. The NBS did not take the recommended actions, therefore EIOPA considers it as non-compliant.
The Recommendation was issued because EIOPA concluded that a breach of capital requirements, driven by the underestimation of technical provisions, had not been appropriately addressed from a supervisory perspective. In particular, with regard to the breach of the Minimum Capital Requirement, the undertaking should be required to immediately cease underwriting new business within the European Economic Area. In addition, the authorisation should be withdrawn without delay, if the undertaking continued failing seriously in its obligations under the Solvency II Directive.
In response to the Recommendation, the NBS stated that they see the situation differently and that specific terms stated in the Recommendation are not met at this point in time. That’s why the NBS is taking other steps to achieve the purpose of the Recommendation, taking into account the current situation of the referred case.
EIOPA highlights that urgent supervisory intervention is justified by the level and duration of the undertaking’s deteriorating solvency position, while the NBS failed to make every effort to comply with the Recommendation. In this context, EIOPA recalls that protection of policyholders as ultimate objective of European insurance supervision can only be ensured by effective and efficient supervisory actions.
The Recommendation was issued under Article 16 of Regulation (EU) No 1094/2010 which empowers EIOPA, with a view to establishing consistent, efficient and effective supervisory practices, and to ensuring the common, uniform and consistent application of Union law, to issue recommendations to one or more competent authorities. Under this article competent authorities have a duty to make every effort to comply with those recommendations and to report on their compliance to EIOPA within two months. EIOPA shall publish the fact that a competent authority does not comply or does not intend to comply with those recommendations. The Recommendation is based on the rules of Directive 2009/138/EC (Solvency II) and EIOPA’s Guidelines on supervisory review process