Showing posts with label Insurance. Show all posts

Monday, 11 February 2019

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Updated tool highlights insurers’ consumer-focused practices across EU


Insurance Europe has published an update to its online consumer focus tool, which outlines examples of the work undertaken by Europe’s insurers to provide innovative products and services for consumers.

The tool, which is available here, provides information through an interactive map of Europe that allows users to click on specific countries to gain insight into insurers’ consumer-focused practices in that particular market.
The tool provides examples of initiatives in several important areas, including:
  • Innovative products and services
  • Digitalisation
  • Enhanced claims management
  • Transparency and financial education
  • Initiatives to fight insurance fraud
The initiatives were developed with specific national features in mind, such as national regulatory frameworks and local consumers’ needs, which — like insurance companies — can differ significantly between EU countries. Insurance products and services are, therefore, not directly transferable from one market to another.

Saturday, 15 December 2018

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EIOPA’s stress test confirms strength of the European insurance industry



In response to the results of the 2018 insurance stress test carried out by the European Insurance and Occupational Pensions Authority (EIOPA), Olav Jones, deputy director general of Insurance Europe, commented:
“Insurance Europe is pleased to see that the 2018 stress test exercise confirms the strength of Europe’s insurance industry with a baseline SCR coverage over 200% and Assets over Liabilities (AoL) ratio of 109%. The purpose of this test is to provide information on financial stability under adverse market developments. EIOPA chose in fact very extreme scenarios, for example the yield curve down scenario includes an interest rate which is equivalent to assuming zero European growth for the next 100 years. The results confirm that, even under the very extreme scenarios applied, the industry would pose no concerns over their ability to pay claims, with the overall AoL ratio remaining above 106% for even the worst scenario.”

It is important to recognise that the regulatory framework for the insurance sector, Solvency II, is already a comprehensive risk-based system which sets conservative capital requirements by covering all the risks that insurers are exposed to. These capital requirements are based on stress scenarios applied to assets/liabilities and calibrated with extreme 1-in-200 year type events and are publicly reported. Therefore, the post-stress SCR ratios reported in the stress test represent the impact of an extreme stress on an extreme stress. Even on this basis the industry is shown to be very resilient.

Thursday, 13 December 2018

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2018 Solvency II review: EC proposal lacks serious ambition to unlock investment the economy needs


Insurance Europe has raised serious concerns in its response to a consultation by the European Commission on its draft proposals for the 2018 review of the Solvency II Delegated Regulation.
While the industry welcomes the Commission’s aim of simplifying Solvency II and increasing proportionality in its application, the proposals lack ambition in several important areas. Unless the final text is improved, the Commission will miss a key opportunity to remove barriers to long-term investment and to unlock insurers’ capacity to support the growth that Europe’s economy so desperately needs.
The Commission’s proposals for the recalibration of long-term equity and the review of the risk margin – both of which have a significant impact on insurers’ capacity for long-term investments and to support the objectives of the Commission’s Capital Markets Union project – must be more ambitious. While acknowledging the Commission’s recognition that action is needed on long-term equity investments, Insurance Europe warned that the Commission’s technical proposal will not work in practice. It is therefore calling for swift action by the Commission to amend its proposal so that it has the intended impact.
Regarding the risk margin, it should first be noted that this is a conceptual element of Solvency II that, according to the European Insurance and Occupational Pensions Authority, accounts for €200 billion of insurers’ capital and is over and above the amount needed to pay customer claims. There is significant evidence that the 6% cost of capital, a key element of its calibration, is too high. This impacts, in particular, long-term products and investment. If the Commission continues to ignore this evidence and preserve the status quo, it will miss a key opportunity to reduce the current barriers to long-term investment by insurers. While a more complete review of its purpose and design can take place in the 2020 review, a first step is needed and justified now.
Insurance Europe also said the review provides the opportunity to take a first step in improving the design of the volatility adjustment, by refining the trigger mechanism for the application of the country adjustment.
It also raised other concerns, including the need to avoid unnecessary limits on the calculation of loss absorbing capacity of deferred tax (LAC DT), which can be found in its response to the consultation.

Tuesday, 20 November 2018

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AMICE calls for a fair and competitive marketplace in Europe



The Association of Mutual Insurers and Insurance Cooperatives in Europe aisbl (AMICE), the voice of the mutual and cooperative insurance sector in Europe, has today highlighted the barriers to cross-border insurance for its members,
Despite forming more than 30% of the European insurance market, there are significant barriers for many mutual and cooperative insurers to actively participate in cross-border insurance activities. With cross-border business being highlighted at EIOPA’s annual conference today in Frankfurt, as well as in the recent report on some of EIOPA’s activities by the European Court of Auditors, AMICE continues to call for all European countries to recognise the mutual model and ensure a balanced approach to supervision and proportionality to maintain diversity in the market and choice for policymakers.
Information contained in AMICE’s recently published Facts & Figures Vol 2 shows the disparity in legislative and regulatory systems in the EU28 and EEA countries, as well as the development of the sector in Europe in the years 2007-2015. Facts & Figures Vol 2 is the biggest longitudinal study of the sector every undertaken.
Sarah Goddard, AMICE Secretary General commented,
She continued,
“Although the European insurance industry in general continues to feel the pressures of a testing business environment, the durability of the mutual and cooperative insurance model has provided a buffer against some of the problems traditionally faced by policyholders when there is a sustained period of challenge. This was clearly illustrated our second edition of the Facts & Figures publication, which showed a substantial increase in market share for our sector in the years of turmoil following the global financial crash a decade ago.”
The full report is available from the AMICE Secretariat or via the AMICE website

Statistical data was sourced and analysed for this report by the International Cooperative and Mutual Insurance Federation (ICMIF). The legal landscape elements of the report were developed through desk research by AMICE, supported by AMICE members, national supervisors, national associations and other trade bodies.

Friday, 16 November 2018

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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.