Question ID: 1350
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 304, 312
Status: Final
Date of submission: 05 Dec 2018
Question
We would ask you to answer the following questions:
- can a supervisory report of the own risk and solvency assessment carried out pursuant to the Article 304(1)(c) of the Commission Delegated Regulation (EU) 2015/35 (hereinafter: ORSA Report), which an insurance company submits to the supervisory authority in the middle of the current year, refer to the previous year, or, more specifically, can the insurance company provide the ORSA Report for 2016 by mid - 2017 (in July) since the ORSA report should be based on a "forward looking" approach?
- if more than one year passed from the date of delivery of the last ORSA Report (for 2015) by the insurance company, and the Guidelines on own risk and solvency (Guideline 14) stipulate that the insurance company should prepare an ORSA Report at least once a year, does it imply the breach of the aforementioned Guideline 14 by the insurance company, as it plans to submit the ORSA Report for 2016 to the supervisory authority only in July 2017?
- since the ORSA process for a given year (in this case for 2016) should be present in the insurance company throughout that year (in this case during 2016), should the conclusion of the ORSA Report for 2016 have been completed at the latest at the end of the year which is covered by the ORSA report (in this case until 31 December 2016), and was the insurance company, in accordance with the provision of Article 312(1)(b) of the Commission Delegated Regulation (EU) 2015/35 required to submit the ORSA Report for 2016 to the supervisory authority within two weeks of the conclusion of the assessment, i.e. in the first half of January 2017 at the latest?
EIOPA answer
As stated in Guideline 14 of the EIOPA Guidelines on ORSA, the undertaking should perform the ORSA at least annually. However, the guideline does not prescribe a concrete timeline for the ORSA. Article 321 (1) (b) of the Solvency II Delegated Regulation only provides that insurance and reinsurance undertakings shall submit to the supervisory authorities the ORSA supervisory report referred to in Article 304(1)(c) within 2 weeks after concluding the assessment.
The ORSA has to be performed on a regular basis and in any case immediately after any significant change in the risk profile of the undertaking but the undertaking decides when to perform the regular ORSA. While the ORSA is a forward looking exercise, it needs to use a reference date which would normally be the same as the reference date for the SCR calculation, but different reference dates could be acceptable if there has been no material change in the risk profile between them. Using the same reference date for the ORSA report and annual regulatory reporting is not prescribed.
Consequently, a delay of more than one year from the date of delivery of one ORSA supervisory report and the next one would normally not be in line with Guideline 14. In addition, it should be noted that Guideline 4 explicitly requests that the undertaking's ORSA policy has to identify the timing for the performance of the ORSA.It is normally expected that insurance undertakings finalise their performance of the ORSA for a particular year the latest by end of December with the signing of the AMSB and therefore NSAs can expect to receive the supervisory ORSA report by mid-January the latest.