EIOPA 2022 June updates

On the 21of June, the EIOPA conference “From uncertainty to strength: Supervision for an economy in transformation” was held to address the challenges we currently face and outline the opportunities that lie ahead for the insurance and pension sectors.

During the conference the challenges to the supervisory community were discussed as well as issues related to the evolution of regulatory frameworks, the behavioral aspects of protection gaps, and the role of conduct supervision in fostering financial health. In this context the role of Solvency II regulation was discussed and the positive impact it has had on the stability of the insurance sector, which was further proven during the COVID-19 pandemic. However, the need to for the regulation to evolve and reflect the current economic conditions was mentioned and specifically, the amendments that are to come as part of the Solvency II 2020 review. The current expectation is that the necessary changes will be voted in by the end of this year and published in the beginning of 2023. The exact date by which they will be enforced was not mentioned, however, based what the above, it is reasonable to expect that the changes might be bundled together with the already numerous amendments in the quantitative reporting templates for the reporting of the figures of the last quarter of 2023.

Keynote speech delivered by Petra Hielkema at EIOPA Annual conference 2022 can be found here.

The full conference can be seen here.

In addition, EIOPA has published a consultation on EIOPA consults on the advice on the review of the securitization prudential framework in Solvency II. The consultation is in response for a call for advice from the European commission on the recent performance of the rules on capital requirements (for banks and (re)insurance undertakings) and liquidity requirements (for banks) relative to the framework’s original objective of contributing to the sound revival of the EU securitisation market. In particular the consultation compare the capital risk charge prescribed by Solvency II for STS securitizations, compared with Non-STS securitizations, and assets with similar risk profile such as bonds and loans. It seems that insurers prefer more traditional asset classes, rather than investing in STS securities, even when the capital risk charge is higher for them, such as Non-STS securities and covered bonds.

Thus, EIOPA is asking for comments from the industry on what other factors than regulation impact their investment behaviour. Comments can be provided by the 1st September, 2022. The full text can be found here.

Furthermore, EIOPA has published two consultation papers – a consultation on its supervisory statements on exclusions in insurance products arising from systemic events and on the management of non-affirmative cyber exposures and a consultation on supervisory statement on the management of non-affirmative cyber exposures. The deadline for providing feedback on both consultations is 18of July, 2022. The full text can be found here.