The Association of British Insurers (ABI) has issued a position paper concerning the principles of materiality and proportionality for the purposes of regulatory reporting under the Solvency II Directive (2009/138/EC).

The paper summarises the discussion that took place at a meeting on 26 January 2015 of the PRA’s Solvency II regulatory reporting industry working group and sets out the industry views that have been developed in response.

The paper identifies a general industry view that this is an area of continuing uncertainty and that, in the absence of further guidance from the European Insurance and Occupational Pensions Authority (EIOPA), it would be helpful for the PRA to form a view on what is material and proportionate in terms of reporting requirements. It proposes that the PRA engage in dialogue with industry, to ensure a common understanding between it and firms.

Five priority areas for firms are identified (in order of priority) as follows:

  • Asset look-through.
  • Intra-group transactions.
  • Risk concentration reporting for groups.
  • Reinsurance recoveries and reinsurance treaties analysis.
  • Units of reporting and cross-check tolerances.

The paper reports that overall, the industry considers it essential for the PRA to adopt a pragmatic approach to the implementation of Solvency II reporting requirements, particularly during the initial reporting periods. The ABI also encourages the PRA to acknowledge that, initially, firms will be implementing these requirements on a “best efforts” basis.

The following are identified as specific actions for the PRA to take in this regard:

  • Allowing for appropriate simplifications and approximations in the initial reporting periods.
  • Providing clarity and confirmation as soon as possible on the PRA’s approach to those initial reporting periods.
  • Identifying “priority templates” for 2016 that are fundamental to solvency monitoring.

It appears that the ABI’s position paper is no longer available online.