Question ID: 3256 - FICOD023
Regulation Reference: (EU) 2022/2454 - ITS with regard to supervisory reporting of risk concentrations and intra-group transactions (FICOD
Topic: Reporting templates on risk concentrations and intra-group transactions for conglomerates (FICOD)
Template: FC.06, FC.07
Status: Final
Date of submission: 13 Feb 2025
Question
In FC 06 and FC 07 the total amount of the risk position in the insurance policies (limit of liability or sum insured, depending on which amount corresponds to the maximum possible risk exposure) has to be stated in item FC 180 Insurance policies. The sum insured merely represents a contractually agreed upper limit and, like the nominal value of a derivative, has little to do with the actual risk exposure. In addition, the allocation to the contractual partner is not appropriate E g for the insurance for a car fleet with sum insured of 100 million lump sum insurance per car and the car company as policyholder the risk of car damage is not attributable to the motor vehicle liability damage is not attributable to the car company In particular, the sum of all sums insured is not a good measure of risk concentration, since the sums insured of all individual cars can only be realized through independent events. The sum insured is not an adequate risk measure H ow shall we proceed in comparable situations where the allocation of the risk to the policyholder is not economically adequate?
EIOPA answer
On the valuation, we refer to Q&A 2783 - European Union (europa.eu)
- All significant exposures to a third party due to the writing of (re)insurance policies should be considered, in so far it would create an exposure above the threshold set by the group supervisor. The setting of these thresholds by the group supervisor can occur on an instrument level or on a total amount of exposure to the third party.
- The reported sum should be the maximum possible payment of the (re)insurer. Therefore, the sum insured or the liability limit as a maximum possible payment is applicable. Reinsurers are expected to report the liability limit, meaning the meaning the total capacity of the treaty (i.e., maximum amount the reinsurer may have to pay).
There is a general expectation to apply the look-through at individual policy holder level on best effort basis. If the reporting at individual policy holder level, beyond the contractual counterparty, would be disproportionate, information on the level of the contractual counterparty of insurance policies can be reported based on the threshold set by the group supervisor. If the group is of the opinion that this information is not representing the actual risk, it might provide additional information to the group supervisor.