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9th November 2011

EIOPA consults on Solvency II reporting and public disclosure

In order to facilitate the preparatory work of insurance and reinsurance undertakings for Solvency II, the European Insurance and Occupational Pensions Authority (EIOPA) has launched a public consultation today with regards to Supervisory Reporting & Public Disclosure for Solvency II.
EIOPA invites market participants and insurance and reinsurance stakeholders to participate in this consultation. EIOPA welcomes comments from all interested parties.
This consultation will end on 20th January.
Danny Clark, insurance partner at KPMG, comments “The release of today’s consultation paper package is a very positive move by EIOPA to get the industry engaged and drive the Solvency II debate forward. Pillar 3 and ORSA have been the two missing parts of the Level 3 guidance and moves to finalise these requirements will give some much needed clarity on the final shape of Solvency II.
Some smaller insurers will welcome the proposal to eliminate quarterly reporting of investments on a security-by-security basis, although it appears that many larger companies will still need to provide this information every quarter. Insurers still face an enormous level of uncertainty on Solvency II which is holding up their implementation plans. There are a number of key areas still open to change awaiting the finalisation of the level 2 implementing measures and we still have to see EIOPA’s consultation on reporting for financial stability purposes, expected in December. In addition, the European Parliament is a key stakeholder and has expressed different views on some key areas. It is time for all parties to work together to issue final guidance on all aspects of the directive so companies can action their plans with confidence–something they can’t do yet.
The adoption of Pillar 3 requirements marks an important milestone for the industry across Europe. We are getting closer to having a transparent and consistent reporting method to provide timely and relevant information about the solvency and risk position of insurance companies. The consultation paper is helpful in providing more clarity about EIOPA’s position. A key question remains regarding what reporting will be required in 2013. Certainty here would be of real value to both preparers and users of solvency information.”
Jim Bichard, insurance partner at PwC, said “To date, Solvency II reporting has tended to take a back seat to capital evaluation and risk management work streams for many European insurers due to the uncertainty around the requirements. EIOPA's publication removes some of this uncertainty and allows insurers to accelerate their implementation plans.
The amount of work required should not be underestimated, as Solvency II reporting will be much more detailed and exhaustive compared to current requirements. Insurers should see this consultation, and the additional clarity it provides, as the much-needed trigger to get their reporting workstreams on track.
This is far more detailed than the last public consultation and demonstrates the size of the task at hand for insurance companies in meeting the extensive disclosures required under the new regime. The reporting requirements have already been subject to public and private consultations and so, in most areas, we would not expect the final requirements to differ materially from those set out by EIOPA. However, insurers need to be aware that the requirements could be supplemented by further reporting requirements for financial stability purposes or to deal with country-specific obligations.
The biggest challenge for most insurers will be the requirement to report to the regulator on a more frequent basis and in some areas to report information that has not previously been needed. Finance functions will need to re-think their target operating model to enable faster reporting and enhanced integration with actuarial, risk and other departments.”