On 19 December 2018, EIOPA announced the publication of a report to the European Commission on group supervision and capital management with a group of insurance or reinsurance undertakings, and freedom to provide services and freedom of establishment under the Solvency II Directive.
In the report EIOPA concludes that the tools it has developed to strengthen group supervision and supervision of cross-border issues have contributed to substantial progress in the convergence of practices of national competent authorities, but significant challenges remain.
The report finds a number of gaps in the regulatory framework that lead to divergent supervisory practices, for example:
- in the definition of intra-group transactions;
- in the assessment of availability of eligible own funds at group level; in the treatment of insurance holding companies and mixed activity insurance holding companies in the scope of group supervision;
- in the inclusion of holding companies, which are not licensed insurance undertakings in the scope of group supervision.
EIOPA also identifies that effective supervision of insurance groups will benefit from a harmonised approach in a number of areas, for example, early intervention, recovery and resolution and the assessment of group own funds.
EIOPA says that the report should be read in conjunction with its December 2017 report to the Commission on the application of group supervision under the Solvency II Directive.