EIOPA

Showing posts with label EIOPA. Show all posts
Showing posts with label EIOPA. Show all posts

Saturday, 11 May 2019

EIOPA reviews the use of Big Data Analytics in motor and health insurance



The European Insurance and Occupational Pensions Authority (EIOPA) published its report on Big Data Analytics in motor and health insurance.
Data processing has historically been at the very core of the business of insurance undertakings, which is rooted strongly in data-led statistical analysis. Data has always been collected and processed to inform underwriting decisions, price policies, settle claims and prevent fraud. There has long been a pursuit of more granular datasets and predictive models, such that the relevance of Big Data Analytics for the sector is no surprise.


For further details please refer to the press releasefact sheet and the report.

Sunday, 7 April 2019

EIOPA welcomes the adoption of the Regulation introducing a Pan-European Personal Pension Product



The European Insurance and Occupational Pensions Authority (EIOPA) welcomed adoption by the European Parliament of the Regulation introducing a Pan-European Pension Product, the PEPP.

Gabriel Bernardino, Chairman of EIOPA said: "This Regulation is an important first step towards giving European citizens an alternative sustainable product to help closing the retirement savings gap. EIOPA, together with the national competent authorities, will ensure timely implementation and consistent application across the European Union. "

Friday, 14 December 2018

EIOPA announces results of the 2018 Insurance Stress Test



The European Insurance and Occupational Pensions Authority (EIOPA) published today the results of its 2018 and fourth Stress Test for the European insurance sector. This year's exercise assessed the participating insurers' resilience to the following three severe but plausible scenarios:

  • A yield curve up shock combined with lapse and provisions deficiency shocks, which means there is a sudden and sizeable repricing of risk premia and a significant increase in claims inflation.
  • A yield curve down shock combined with longevity stress, which means there is a protracted period of extremely low interest rates accompanied by an increase in the life expectancy.
  • A series of natural catastrophes where European countries are hit in a quick succession of four windstorms, two floods and two earthquakes.
In this year's exercise 42 European (re)insurance groups participated representing a market coverage of around 75 % based on total consolidate assets. The reference date was 31 December 2017.
The impact of the different scenarios on the balance sheet position and on the capital position of the participating groups was assessed by the excess of Assets over Liabilities and an estimation of the post-stress Solvency Capital Requirement (SCR) ratio. Given the operational and methodological challenges related to the recalculation of the group SCR, participating groups were allowed to use approximations and simplifications as long as a fair reflection of the direction and magnitude of the impact was warranted.
In the pre-stress (baseline) situation, participants reported an aggregate Assets over Liabilities (AoL) ratio of 109.5 % and a pre-stress SCR coverage of 202.4 %.
Overall, the exercise confirmed the significant sensitivity to market shocks combined with specific shocks relevant for the European insurance sector. On aggregate, the sector is adequately capitalised to absorb the prescribed shocks.
In the 'yield curve up' scenario, the excess of assets over liabilities is reduced by approximately one third (-32.2 %) and the aggregate post-stress SCR ratio drops to 145.2 %. Six groups reported a post-stress SCR ratio below 100 %.
In the 'yield curve down' scenario, the impact on the excess of assets over liabilities is of similar magnitude (-27.6 %) with an aggregate post-stress SCR ratio of 137.4 %.  Seven groups reported a post-stress SCR ratio below 100 %.
In the natural catastrophe scenario only a small decrease of 0.3 percentage points of assets over liabilities ratio was reported. Overall, the participating groups demonstrate a high resilience to the series of natural catastrophes tested, showing the importance of the risk transfer mechanisms in place, namely reinsurance, which absorbed 55 % of the losses. Consequently, the most affected groups are reinsurers and those direct insurers largely involved in reinsurance activities.
One of the objectives of this year's exercise, in line with the recent recommendations from the European Court of Auditors, was to increase transparency by requesting the voluntary disclosure of a list of individual stress test indicators by the participating groups. To date, four of the 42 participating groups provided consent to the publication of the individual results.
Gabriel Bernardino, Chairman of EIOPA said: "This stress test marks an important step forward in assessing the resilience of the European insurance sector to a set of adverse but plausible scenarios and provides a valuable basis for a continuous dialogue with the participating groups on the identified vulnerabilities and the preventive measures and potential management actions to address them, should they materialise."

Friday, 30 November 2018

EIOPA consults on the integration of sustainability risks and factors



European Insurance and Occupational Pensions Authority (EIOPA) published for consultation its draft technical advice on possible amendments to the delegated acts under Solvency II and the Insurance Distribution Directive (IDD) concerning the integration of sustainability risks and factors.
The proposed draft amendments to the Solvency II Delegated Regulation are aimed to ensure identification and assessment of sustainability risks in the areas of underwriting and investments. Insurance undertakings shall take into account the potential long-term impact of investment decisions on sustainability factors (stewardship principle) and where relevant reflect policyholders' Environmental, Social and Governance (ESG) preferences.
The proposed draft amendments under the IDD relate to the following two areas:
  • Conflicts of interest: When identifying the types of conflicts of interest which might damage the interests of a customer, insurance undertakings and insurance intermediaries should include those that potentially may arise in relation to sustainability. Insurance undertakings and insurance intermediaries should have in place appropriate arrangements to ensure that ESG considerations are included in the advisory process and do not lead to mis-selling practices.
  • Product Oversight & Governance: Customers' ESG preferences in the target market shall be considered in various stages of product lifecycle in case the insurance product is offered to customers seeking insurance products with an ESG profile.
On 1 August 2018, EIOPA received a request from the European Commission to provide technical advice on potential amendments to or introduction of delegated acts under the Solvency II Directive and IDD with regard to the integration of sustainability risks and sustainability factors. This Call for Advice refers particularly to the following areas:
  • Organisational requirements
  • Operating conditions
  • Risk management
  • Target market assessment for the IDD only
EIOPA is seeking stakeholders comments on the draft technical advice developed on the basis of the following three principles:
  • Coherence with current requirements
  • Proportionality
  • Cross-sectoral consistency
The draft technical advice can be obtained via EIOPA's Website.
Stakeholders are invited to provide their comments by Wednesday, 30 January 2019 responding to the survey questions accessible via this link.

Friday, 16 November 2018

EIOPA assesses supervisory practices and application of key functions through peer review





  • This peer review assessed how National Competent Authorities (NCAs) supervise and determine the application of the key functions by the insurer with particular emphasis on proportionality
  • In general NCAs apply the principle of proportionality
  • Some weaknesses exist, leading to recommended actions to 18 NCAs in 8 different areas of supervisory approaches
  • For the first time, the findings are published on a named basis
European Insurance and Occupational Pensions Authority (EIOPA) published the findings of its  peer review assessing how National Competent Authorities (NCAs) supervise and determine whether an insurer's set­ting of key functions fulfils the legal requirements of Solvency II with a particular emphasis on proportionality.
The review examines practices regarding:
  • combining key functions under one holder;
  • combining key functions with administrative, management or supervisory body (AMSB) member­ship or with carrying out operational tasks;
  • subordination of one key function under another key function;
  • split of one key function among several holders;
  • assessment of the fitness of key function holders; and
  • outsourcing of key functions.
Key functions (risk management, actuarial, compliance and internal audit) are an essential part of a good system of governance under Solvency II, and, are expected to be operationally independent to ensure effective internal control. Given that the implementation of the governance requirements should reflect the natural scale of complexity of the risks run by the insurers, NCAs should apply the principle of proportionality in relation to the compliance with key function holder requirements.
The report includes findings from a comparative analysis of the key functions, identifies best practices and presents an overview of recommended actions addressed to the NCAs and EIOPA.
Overall, NCAs have adopted similar approaches in assessing how insurers manage key functions and applied the principle of proportionality in their assessment. Four best practices have been identified, providing guidance to NCAs for a more systematic approach regarding the principle of proportionality as well as for ensuring consistent and effective supervisory approaches.
The report also identifies some weaknesses, resulting in a number of recommended actions issued to NCAs. Some NCAs had not yet assessed key functions according to the Solvency II requirements. Other NCAs had weaknesses, in particular regarding the depth assessment and mitigating measures demanded from insurers for example in cases where combinations exist. The areas of recommended actions are linked with the supervisory approach of NCAs, the different combinations of key function holders including the internal audit function and AMSB membership as well as the fitness of the key function holders and outsourcing. 
In line with the recently updated methodology, for the first time, the peer review findings are published in full and on a named basis.
As a result of this peer review, many NCAs have already undertaken actions to improve supervisory practices. These improvements will be taken into consideration in the follow-up to this review.
Gabriel Bernardino, Chairman of EIOPA, said: "The results of this peer review demonstrate the effective approach of national competent authorities in applying the principle of proportionality in their assessment of key functions. Through the implementation of the recommended actions consistent approaches among supervisory authorities will be further enhanced. I particularly welcome the increased transparency through the publication of the findings on a named basis. In being open about their activities, including where improvements can be made, the supervisory community is strengthening the foundations of supervisory convergence."
A shorter Executive Summary, the full report and the methodology applied in the conduct of the peer review can be obtained via EIOPA's Website.