This announcement is in response to a European Insurance and Occupational Pensions Authority (EIOPA) consultation on the potential harmonisation of frameworks for insurers.
The lobby group said in its position paper that Solvency II already allows early intervention when either the Minimum Capital Requirement (MCR), or the Solvency Capital Requirement (SCR) are breached, and that this is sufficient.
It states: “Insurance Europe believes it is important to reiterate that Solvency II already provides several safeguards that…
Continue Reading “Solvency II means no need for new EU insurance framework” at The Actuary
The European Commission has identified Solvency II as “one area where significant improvements could be achieved“, for example, by “simplification” and better “technical consistency“.
So, when it published its Call for Advice in July 2016, the Commission asked EIOPA to look at the “proportionate and simplified application of the requirements, and removal of unintended inconsistencies“, within the standard formula SCR, and between Solvency II and the CRR / CRD and EMIR.
The Commission also said that it would look at the possible “removal of unjustified constraints to financing“, especially when it comes to long-term investment, and that it might ask EIOPA for a technical advice on these issues later on.
Continue Reading “Blog: Solvency II and the standard formula SCR: Commission & EIOPA review – next steps” at JD Supra Business Advisor
In his submission to the Committee of European Insurance and Occupational Pensions (CEIOPS), now known as the European Insurance and Occupational Pensions Authority (EIOPA) consultation of 2009, on the Level 2 implementation of the risk margin, Dutch actuary Hans Waszink drew attention to a fundamental flaw in the proposed formula.
In particular, he pointed out that, in certain conditions, the risk margin could be even higher than the solvency capital requirement (SCR) itself.
This incongruity had been of little practical significance in most situations, but in the current low interest rate environment and for long-duration obligations such as longevity it can, and does, produce very anomalous outcomes.
Continue Reading “A fundamental flaw in Solvency II” at The Actuary News
The European Insurance and Occupational Pensions Authority (EIOPA) has published a work plan outlining the strategic direction of its activities over the next three years, from 2017 to 2019.
The strategy is set out in a single programming document (SPD), developed in accordance with European Commission requirements to enhance consistency and comparability across European Union bodies.
The SPD specifies the tasks EIOPA is mandated, and required, to undertake, as well as its strategic objectives and pensipriorities for 2017.
Continue Reading “EIOPA sets out strategic direction of activities for next three years” at The Actuary News
The European Insurance and Occupational Pensions Authority (EIOPA
) published today an updated technical documentation on the methodology to derive the risk-free interest rate term structures (RFR) for Solvency II
The changes were required in the following areas:
- The update of the representative portfolios to calculate the volatility adjustments (VA) on the basis of more up-to-date and granular data on the investments of the European (re)insurance companies. This update was announced on 1 July 2016, see here.
- The peer country for Cypriote government bond yields used for the calculation of the volatility adjustments and the fundamental spread was changed from Greece to Portugal.
Continue Reading “EIOPA publishes updated technical methodology documentation for risk-free interest rate term structures for Solvency II” at EIOPA
Rushed changes to the ultimate forward rate (UFR) could risk pushing insurers towards sub-optimal investment strategies, which could unnecessarily impact policyholders’ returns negatively, according to Insurance Europe, the European insurance and reinsurance federation.
It says that it is unnecessary to change the UFR before the Solvency II review stressing that the current framework has several additional layers of protection in place already to make sure policyholder claims will be paid.
On possible changes to the methodology for calculating the UFR to a European Insurance and Occupational Pensions Authority meeting, Insurance Europe said there is no need for changing it either for prudential or policyholder protection reasons.
Continue Reading “Solvency II changes may threaten investment returns for policyholders” at Intelligent Insurer
A developing row over how discount rates are set has reminded European insurers that Solvency II relies on a political deal – and that political deals can be broken.
To make the directive possible, European policy-makers negotiated a compromise to soften the effect of a market-based regime on certain pockets of the industry – taking the form of the matching adjustment, volatility adjustment and transitional measures.
Few would suggest reversing any of those, but the European Insurance and Occupational Pensions Authority (Eiopa) is proposing changes to how the directive’s ultimate forward rate (UFR) is calculated – an idea that is proving highly controversial.
Continue Reading “The fault lines in Europe’s Solvency II compromise” at Risk.net
The European Insurance and Occupational Pensions Authority (EIOPA) published its June 2016 report on financial stability in the (re)insurance and occupational pension fund sectors of the European Economic Area.
EIOPA observed an ongoing “extremely challenging macro-economic and financial environment”.
Monetary policy and low crude oil prices imply a protracted low yield environment in the short- to medium-term. In this environment, the “double-hit” scenario cannot be ruled out.
Both risks – low yields and a “double-hit” – will be in the focus of EIOPA’s Insurance Stress Test 2016.
Continue Reading “EIOPA updates on the financial stability risks” at All About Insurance news