On 19 June 2017, EIOPA published a supervisory statement which outlines the first supervisory experiences in respect of the application of the regulation on the Own Risk and Solvency Assessment ("ORSA") by (re)insurance undertakings.
EIOPA made a number of key findings including:
- the majority of (re)insurance undertakings have made good progress in implementing the ORSA process;
- there is a need for a greater involvement of the administrative, management or supervisory bodies (e.g. boards of directors);
- the scope of risk assessment should be further expanded;
- there is an overreliance on the standard formula by undertakings and undertakings should understand how its specific risk profile deviates from the standard assumptions; and
- the quality of stress testing, including reverse stress tests and scenarios used in the ORSA assessments, should be further improved.
The report also states that EIOPA analysed and continues to monitor the feedback given by the National Supervisory Authorities to the undertakings regarding their ORSAs.
To view the report, please click here.