Question ID: 2320
Regulation Reference: (EU) No 2015/2450 - templates for the submission of information to the supervisory authorities
Topic: Reporting Templates
Article: Article 35 of SII Directive
Template: S.05.01
Status: Final
Date of submission: 30 Jul 2021
Question
S.05.01 Changes in Technical Provisions
(Non Life rows R0410-R0500 and Life rows R1710 – R1800)
It is clear from questions 571, 1176 and others that template S.05.01 is reported from an accounting perspective (Local GAAP or IFRS if accepted as local GAAP).
Under SII there is no requirement to perform a statutory valuation (Local GAAP or IFRS) more frequently than once per year.
If the statutory valuation is performed only at year-end then the quarterly “Changes in Technical Provisions” will be zero because there is no movement in technical provisions.
Further, if some elements of technical provisions are revalued quarterly for accounting reasons then there would be “Changes in Technical Provisions” even though these may be small compared to a full revaluation.
Since there is no disclosure whether a statutory valuation has been performed for a quarterly return the values reported on these rows have little meaning.
My interpretation is that if no statutory valuation has been performed for the quarter then “Changes in Technical Provisions” should be zero in the quarterly S.05.01.
Is this correct? Or should some other approach be followed?
Background of the question
It is clear from questions 571, 1176 and others that template S.05.01 is reported from an accounting perspective (Local GAAP or IFRS if accepted as local GAAP).
Under SII there is no requirement to perform a statutory valuation (Local GAAP or IFRS) more frequently than once per year.
If the statutory valuation is performed only at year-end then the quarterly “Changes in Technical Provisions” will be zero because there is no movement in technical provisions.
Further, if some elements of technical provisions are revalued quarterly for accounting reasons then there would be “Changes in Technical Provisions” even though these may be small compared to a full revaluation.
Since there is no disclosure whether a statutory valuation has been performed for a quarterly return the values reported on these rows have little meaning.
EIOPA answer
S.05.01 should not create any obligation to recalculate statutory technical provisions. Therefore, in case technical provisions are calculated only annually according to local GAAP, the amount of “Changes in other technical provisions" reported quarterly in S.05.01 should not be reported, i.e., equal to 0. However, in case undertakings recalculate statutory technical provisions quarterly, even if it is only for internal purposes, the “change in other technical provisions" should be reported quarterly.