Question ID: 2242
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Topic: Solvency Capital Requirement (SCR)
Article: 120 (and 121, 122, 123, 124, 125)(Annex XIII)
Template: S.27.01
Status: Final
Date of submission: 22 Jan 2021
Question
According to the EIOPA Delegated Regulation (EU) 2015/35 (Article 120) and Annex XIII, the capital requirement for natural catastrophe sub-modules in regions other than those set out in Annex XIII should be calculated based on premiums. In the view of Brexit, should an undertaking calculate the natural catastrophe risk capital for the United Kingdom based on the Premium or Sum insured? Could you please also advise if the United Kingdom should be treated differently than other EU members for the Non-life catastrophe risk sub-module (article 119) in the view of the EIOPA paper (EIOPA-BoS-18/201 18 May 2018, “Opinion on the solvency position of insurance and reinsurance undertakings in light of the withdrawal of the United Kingdom from the European Union”)?
Background of the question
EIOPA paper (EIOPA-BoS-18/201 18 May 2018, “Opinion on the solvency position of insurance and reinsurance undertakings in light of the withdrawal of the United Kingdom from the European Union”)
EIOPA answer
Question: According to the EIOPA Delegated Regulation (EU) 2015/35 (Article 120) and Annex XIII, the capital requirement for natural catastrophe sub-modules in regions other than those set out in Annex XIII should be calculated based on premiums. In the view of Brexit, should an undertaking calculate the natural catastrophe risk capital for the United Kingdom based on the Premium or Sum insured?
A: The natural catastrophe risk capital for the United Kingdom should be based on the sum insured. The methodology using the sum insured as input is also valid for countries which are not EU Member States such as Switzerland.
Could you please also advise if the United Kingdom should be treated differently than other EU members for the Non-life catastrophe risk sub-module (article 119) in the view of the EIOPA paper (EIOPA-BoS-18/201 18 May 2018, “Opinion on the solvency position of insurance and reinsurance undertakings in light of the withdrawal of the United Kingdom from the European Union”)?
A: No the UK should not be treated differently for the Non-life catastrophe risk sub-module.