At a conference held by A&L Goodbody on 22 May 2013, the head of EIOPA's Policy Unit, Justin Wray, outlined the purpose of EIOPA's recently issued draft Solvency II Guidelines; and provided some insights into how they will operate in practice. He clarified that there is no material difference between the forward looking risk assessment (FLRA) (the subject of a particular set of draft Guidelines) and an Own Risk and Solvency Assessment (ORSA) under Solvency II. He emphasised that the process employed by the insurer for this assessment is important, rather than only the end result/report. He added that the FLRA process should assess all areas including finance, risk, actuarial and strategic. While he acknowledged that the reporting requirements reflected in the draft Guidelines did impose a burden, he pointed out that this burden would have to be borne eventually.Furthermore, he commented that adherence to the Guidelines would help to minimise reporting errors once Solvency II is implemented. He stressed that the Guidelines on pre-application of internal models are necessary to assist supervisors and insurers to assess preparedness for this aspect of Solvency II; but pointed out that this step represented a pre-application, not a pre-approval, of internal models.
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Insight into draft Solvency II Guidelines from EIOPA
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