The European Insurance and Occupational Pensions Authority (EIOPA) has opened a new series of consultations on legal instruments arising from the review of the Solvency II framework. This consultation round includes new and revised technical standards and guidelines.
The six consultations published today concern two revised implementing technical standards (ITS), two revised guidelines (GL), one set of new regulatory technical standards (RTS) and one set of guidelines. These cover topics ranging from the calculation of the risk margin to supervisory powers for addressing deficiencies in insurers’ liquidity management. The consultations stem from the recent review of the Solvency II framework, which aims to implement targeted improvements in the regulation and supervision of (re)insurers across Europe.
All revisions in this series of consultations align with EIOPA’s balanced approach to regulatory simplification and burden reduction. In particular, the consultation proposals on the revised guideline instruments include a reduction in the number of guidelines by at least 25%.
EIOPA invites stakeholders to provide their feedback on the consultation papers listed below by responding to the questions via the online surveys no later than January 5, 2025. All responses will be published on EIOPA’s website unless otherwise requested.
Revised ITS on disclosure templates for supervisory authorities
For this ITS, EIOPA proposes targeted adjustments that reflect amendments made to relevant regulatory texts in recent years, including those the European Commission intends to make in the ongoing review of Solvency II such as requiring additional disclosure from supervisory authorities on the application of the new proportionality framework.
Revised ITS on the treatment of matching adjustment
Regarding the procedures for the approval of matching adjustment (MA), EIOPA considers certain targeted changes necessary. These include adjustments to reflect that full diversification with MA portfolios that are not ring-fenced may be taken into account in the solvency assessment and that undertakings may combine liquidity plans for their MA with the liquidity risk management plan.
Revised Guidelines on the valuation of technical provisions
EIOPA’s proposal on the Guidelines for the valuation of technical provisions shortens, simplifies, and removes certain guidelines on the calculation of the risk margin while maintaining clear guidance on their application. Guideline 62 is proposed to be updated to reflect the introduction of the lambda factor in the risk margin calculation.
Revised Guidelines on ring-fenced funds
A review of the Guidelines on ring-fenced funds has led to the proposed deletion of several guidelines and the update of certain legal references to address inconsistencies, resulting in a 29% reduction in the total number of guidelines. Moreover, amendments to the guidelines reflect that, following the Solvency II Review, not all MA portfolios will be treated as ring-fenced funds.
RTS on the simplified calculation of the risk margin
These proposed RTS reflect the changes the European Commission intends to implement regarding the general calculation of the risk margin in the level 2 provision on the simplified calculation of the risk margin.
Guidelines on supervisory powers on liquidity vulnerabilities
The Solvency II Review has introduced a mandate for EIOPA to develop Guidelines on supervisory measures aimed at addressing deficiencies in undertakings’ liquidity management. These proposed new Guidelines outline the form, activation and extent of powers that supervisors may exercise to reinforce the liquidity position of undertakings, and specify the conditions under which redemption rights may be temporarily suspended.