Revised Guidelines on Valuation of Technical Provisions

During the 2020 review of Solvency II EIOPA identified several divergent practices regarding the valuation of best estimate, as presented in the analysis background document to EIOPA’s Opinion on the 2020 review of Solvency II. Divergent practices require additional guidance to ensure a convergent application of the existing regulation on best estimate valuation.

In accordance with Article 16 of Regulation (EU) No 1094/20102 EIOPA issues these revised Guidelines to provide guidance on how insurance and reinsurance undertakings should apply the requirements of Directive 2009/138/EC3 (“Solvency II Directive”) and in Commission Delegated Regulation (EU) No 2015/354 (“Delegated Regulation”), on best estimate valuation.

The revised Guidelines are addressed to competent authorities as defined in Article 4(2) of Regulation (EU) No 1094/2010.

The revised Guidelines apply to both individual undertakings and mutatis mutandis at the level of the group.

This revision introduces new Guidelines and amends current Guidelines on topics that are relevant for the valuation of best estimate, including the use of future management actions and expert judgment, the modelling of expenses and the valuation of options and guarantees by economic scenarios generators and modelling of policyholder behaviour. EIOPA also identified the need for clarification in the calculation of expected profits in future premiums.

These revised Guidelines should be read in conjunction with and without prejudice to the Solvency II Directive, the Delegated Regulation and EIOPA’s Guidelines on Technical Provisions. Unless otherwise stated in the documents provided, the current guidelines of EIOPA’s Guidelines on technical provisions remain unchanged and continue to be applicable.

If not defined in these revised Guidelines, the terms have the meaning defined in the Solvency II Directive.

These revised Guidelines do not deviate from the previous Guidelines and only add additional details compatible with the high-level guidance included in the previous Guidelines.

These revised Guidelines shall apply from 01-01-2023.

For reference, check the final report.