On 10 July 2012, EIOPA published its "Final Report on Public Consultations No. 11/009 and 11/011 on the Proposal for the Reporting and Disclosure Requirements" (the final report is available here). The report reduces the reporting burden that would otherwise have fallen on firms. For example:
- the threshold for reporting financial stability information has been increased from €6bn to €12bn;
- the balance between quarterly and annual reporting has been adjusted, so there's less to report on a quarterly basis and there's no need to report some information twice (for example, when a quarterly report coincides with year-end);
- groups will not be required to report their technical provisions by line of business; and
- statutory P&L accounts will only be required every 6 months instead, of every quarter; and the requirement for a statutory balance sheet has been dropped.
EIOPA has also confirmed that (re)insurers are not required to carry out a full SCR calculation for inclusion in in their quarterly reports - a best efforts update of the most volatile elements is sufficient for quarterly reporting.
This all seems like good news, although it comes with two caveats:
- although the report gives a clear steer on the level of granularity that firms will be expected to report to, on a quarterly and annual basis, the details will almost certainly change when Omnibus II and the final Level 2 Regulation have been made. The report should therefore help firms prepare for Pillar 3, but it's not enough for them to complete their preparations now; and
- although EIOPA is aware of, and shares, some of the industry's concerns about the time that's need to prepare for compliance, it can't do much about it. EIOPA notes that, if XBRL is chosen as the new technical format for reporting templates, firms will require up to 2 years to implement and test the necessary systems, but it also recognises (or complains) that the reporting package cannot be finalised until Omnibus II and the Level 2 Regulation have been finalised, and finalisation depends on "external factors".
This may begin to explain why a recent Ernst & Young survey (available here) shows that only 36% of (re)insurers have taken the first step towards Pillar 3 compliance, by carrying out a detailed gap analysis between their current reporting capabilities and their Solvency II obligations, and 24% haven't even started.