Question ID: 1801
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 49, 274
Status: Final
Date of submission: 19 Dec 2018
Question
We kindly ask for your support in clarifying a specific issue related to the application of the Solvency II provisions regarding outsourcing in conjunction with the provisions of Regulation 21327/85 on the European Economic Group (EEIG).
In the situation where two insurance companies, entities of a same group, set-up an European Economic Interest Group, in the sense of the provisions of the Regulation 2137/85, for pursuing certain insurance related activities (for example, claims settlement), could this be interpreted as outsourcing, in accordance with article 49 of Solvency II Directive and article 274 of Delegated Act 35/2015 ?
Please consider that the respective EEIG has the following features:
• has been set-up without capital;
• performs activities only for its members;
• performs activities that are ancillary to the main activity of its founders;
• is a non-profit entity, performing services for the common and direct interest of its members;
• the common expenses resulted from its activities performed in the interest of its members are beard by each of these members, through an expense statement;
• controlling of this EEIG is performed by the two founding members.
EIOPA answer
According to the definition in Article 13 of the Solvency II Directive, outsourcing' means an arrangement of any form between an insurance or reinsurance undertaking and a service provider, by which that service provider performs a process, a service or an activity, which would otherwise be performed by the insurance or reinsurance undertaking itself. Article 49 of the Directive and Article 274 of the Delegated Regulation contain provisions applicable to outsourcing, some of them only relevant with respect to the outsourcing of critical or important functions or activities.
It should be noted that according to Article 1 of the Council Regulation (EEC) No 2137/85, European Economic Interest Groupings have the capacity, in its own name, to have rights and obligations of all kinds, to make contracts or accomplish other legal acts, and to sue and be sued. Consequently, in the case referred the EEIG could be treated as a "service provider" in the sense of Article 13 of the Solvency II Directive; therefore provisions in Article 49 of the Solvency II Directive and Article 274 of the Solvency II Delegated Regulation would be applicable.
In particular, Article 274 (2) of the Delegated Regulation provides that where the insurance or reinsurance undertaking and the service provider are members of the same group, the undertaking shall, when outsourcing critical or important operational functions or activities take into account the extent to which the undertaking controls the service provider or has the ability to influence its actions.