On 27 March 2013, EIOPA launched a public consultation on Guidelines related to the preparation for Solvency II (commonly referred to as Solvency II interim measures or “Solvency 1.5”). The main purpose of the Guidelines is to support both National Competent Authorities (NCAs) and undertakings in preparing for the Solvency II regime. The Guidelines cover those areas that EIOPA considers fundamental to ensure effective preparation for Solvency II:
- system of governance, including risk management;
- forward looking assessment of the undertaking’s own risk (based on the Own Risk and Solvency Assessment (ORSA) principles);
- submission of information to NCAs; and
- pre-application of internal models.
The Guidelines will take effect from 1 January 2014 and NCAs must either comply or explain their reasons for not complying with the Guidelines. NCAs are expected to ensure that insurance companies and groups take active steps towards implementing the relevant aspects of the regulatory framework addressed in the Guidelines so that when Solvency II is finally implemented, its requirements can be fully complied with. EIOPA emphasises however that the Guidelines should be applied in a proportionate manner, particularly with regard to the burden on small and medium size undertakings.
The public consultation will end on 19 June 2013 and EIOPA invites comments from all interested parties.
EIOPA intends to subsequently publish the final Guidelines later in 2013. Please click here to view the relevant consultation documentation.