Solvency II On 16 November 2011, the European Insurance and Occupational Pensions Authority ("EIOPA") hosted its first Annual Conference, where amongst other things EIOPA provided an update on its on-going work in preparing for the future implementation of the Solvency II Directive and the timeline of activities necessary to prepare for Solvency II. The timeline proposed by EIOPA is based on a number of assumptions around the development of the political process, namely: the approval of the Omnibus II Directive by the European Parliament and the Council of the European Union and the publication of the proposal for a Delegated Act by the Commission in the first half of 2012; a phasing-in period of the new regime during 2013; and the application of Solvency II as of 1 January 2014. EIOPA emphasised that the work plan for the consultation may be adjusted depending on the realisation of these assumptions. Under the current European Parliament and European Council proposals, a distinction is drawn between the implementation of Solvency II by Member States (1 January 2013) and the application of Solvency II to insurers (1 January 2014). Despite the delayed implementation of Solvency II, it is likely that insurers will be obliged to prove their readiness in respect of its provisions before that implementation date. EIOPA Consultations: Solvency II EIOPA published two consultation papers setting out its draft proposals on: Own Risk and Solvency Assessment ("ORSA") guidelines; and Guidelines for Supervisory Reporting and Public Disclosure. The ORSA guidelines paper sets out 24 guidelines, 15 of which relate to individual firms and groups and 9 of which relate to groups. The guidelines focus on identifying and assessing firms' overall solvency needs (rather than just capital needs) and highlight the need to distinguish between risks which firms propose to cover with capital and those which will be managed through other risk mitigation techniques. The paper contains some useful guidance for firms using either the standard formula or an internal model for the calculation of their regulatory capital requirement and how the OSRA should link to and support this process. The principle of proportionality should be reflected throughout the ORSA and it should be noted that an ORSA should be performed at least annually and should trigger a corresponding Solvency Capital Requirement ("SCR") calculation. The EIOPA Consultation Paper on guidelines for supervisory reporting and public disclosure contain proposals which define the content and format of insurers' Solvency II reporting consisting of private reporting to their supervisors and public reporting to all stakeholders. This Consultation Paper consists of guidelines which cover: the content of the narrative Solvency and Financial Condition Report; the content of the narrative Regular Supervisory Report; reporting in the case of predefined events; and processes for public disclosure and supervisory reporting. This Consultation Paper represents an important milestone in the development of the Solvency II regime, particularly as many supervisory authorities have already indicated that preliminary Solvency II reports will be required in 2013. The consultation period for both papers ends on 20 January 2012. This period provides the last chance for stakeholders to influence the reporting requirements before they are finalised. A copy of both papers can be found on EIOPA's website at: http://eiopa.europa.eu/consultations Central Bank Solvency II Matters: Issue 6 The sixth edition of the newsletter, circulated on 6 December 2011, focuses on the latest Solvency II policy developments and implementation activities and events, including the following: Industry Readiness Survey: This was issued to industry on 1 September. Approximately 220 firms submitted completed responses. Firms that did not respond to the survey should be aware that the Insurance Supervision teams will be following up to obtain updates on their Solvency II preparations. Implementation update: The Central Bank is working on the assumption that Member States will be required to transpose Solvency II by 1 January 2013, while insurers will have until 1 January 2014 to implement the provisions. However, insurers are advised that they may be subject to reporting and other requirements during 2013. Omnibus II: The European Parliament has revised its indicative timelines for the adoption of the Omnibus II Directive. The vote on the ECON Committee report on the Directive has been moved back from 20 December 2011 to 24 January 2012 and the indicative date for the wider plenary vote has moved from 13 February to 17 April 2012. A copy of the newsletter is available on the Central Bank's website at: www.centralbank.ie. UK Financial Services' Authority Publish Solvency II Information On 9 November 2011, the Financial Services Authority ("FSA") published the first of their Consultation Papers (CP 11/22) on the transposition of Solvency II. The Consultation Paper contains an explanation of the draft rules and guidance which will form the new prudential sourcebook for insurers in the FSA Handbook (SOLPRU). Submissions are invited until 15 February 2012. CP 11/22 can be found on the FSA website at: www.fsa.gov.uk. EIOPA Consultation: Complaints Handling by Insurers On 9 November 2011, EIOPA issued a consultation paper - "The Proposal for Guidelines on Complaints Handling by Insurance Undertakings" (the "Draft Guidelines"). The Draft Guidelines are being issued to clarify EIOPA's expectations regarding the internal complaints handling system of insurers. In addition, it provides guidance on the provision of information to consumers and procedures for responding to complaints, thereby ensuring the...
Insurance Quarterly Legal And Regulatory Update - 1 October 2011 - 31 December 2011
|Author:||Ms Breeda Cunningham|
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