Skip to main content
European Insurance and Occupational Pensions Authority

1853

Q&A

Question ID: 1853

Regulation Reference: (EU) No 2015/2450 - templates for the submission of information to the supervisory authorities

Topic: Reporting Templates

Article: 35, article 41 (1) and (3) of the Delegated Regulation (2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII) (EU))

Template: S.02.01

Status: Final

Date of submission: 29 Nov 2019

Question

Proper presentation of Reinsurance receivables and Reinsurance payables that are not past-due or not due for payment by the valuation date (which means that  according to Instructions regarding reporting templates in ITS 2015/2450 they should not be presented in (S.02.01.C0010/R0370)/(S.02.01.C0010/R0830)) as they are  not within the contract boundary or the insurance claims have been settled on the valuation date (which means that according to article 41 (1) (3) of the Delegated Regulation they should not be presented in (S.02.01.C0010/R0270)). Could you please confirm that we interpret correctly or present arguments (evidences) against approach specified in "Other information*"?

EIOPA answer

One of the most important goals of reporting is to have a proper and clear view of the financial position and risks of an insurance or reinsurance undertaking in the Solvency II balance-sheet. Please note that this answer is only valid for the purposes of classification within the Solvency II balance-sheet (for the financial statement please refer to your local GAAP).

In the balance sheet, in the item 'recoverable', there is uncertainty on the amount that is to be expected from the reinsurer. In other words, it reflects an insurance risk. The balance sheet item 'receivable' is not subject to such uncertainty because it refers to an amount that has been agreed between cedent and reinsurer, only the amount has not been payed yet. Only “recoverables" item includes some statistical uncertainty (i.e. insurance risk) while the “receivables" does not. Both balance sheet items have some 'credit risk' (i.e. financial risk) depending on the rating of the counterpart.

Taking the above into consideration, everything related to the 'best estimate' of the technical provisions should be represented in 'reinsurance recoverables'. As long as the claim between the policyholder and insurance undertaking (original claim) has not been settled, the claim is part of the technical provision, i.e. both in liabilities under “Technical provisions" and in assets under “Reinsurance recoverables".

After the claim has been settled between policyholder and insurance undertaking, the claim is no more included in the technical provisions in the liabilities side and a correspondent movement in the “Reinsurance recoverables" should be done. At this point, the possible claim from cedent toward the reinsurer is moved from 'reinsurance recoverable' to 'reinsurance receivable'.

All 'due' and 'past due' payments (open at valuation date) between reinsurer and cedent stemming from settled claims between primary insurer and policyholder, should be shown in the item 'reinsurance receivables' / 'payables' and not in the item 'any other assets not elsewhere shown'.

EIOPA will put forward a corresponding amendment in the next revision of the ITS. In the meantime, undertakings can choose to comply with this interpretation for the Solvency II submissions.