31 March 2015
Solvency II Newsletter
The March 2015 issue of the Solvency II Matters Newsletter is now available to view or download.
Solvency II Information Notes
The Insurance Directorate has published two further Solvency II Information Notes. The latest notes outline the application processes for:
13 March 2015
Solvency II Information Note
The Insurance Directorate has published a third Solvency II Information Note. The latest note outlines the application processes for the Matching Adjustment, the Volatility Adjustment, the Transitional measures on Risk Free Interest Rate and Transitional measures on Technical Provisions. It supplements Information Note 1 which was published on 27 February 2015.
Solvency II Preparatory Phase - Taxonomy and Filing Rules
Please be advised that the Central Bank of Ireland has implemented version 1.5.2c of the EIOPA Preparatory taxonomy. Submissions to the Central Bank of Ireland are expected to be in XBRL format validated against version 1.5.2c of the Preparatory taxonomy. Version 1.5.2c is available here on the EIOPA website.
The version of the filing rules the Central Bank of Ireland will use is currently under review. Undertakings should review this document on the EIOPA website for the latest version of the filing rules.
27 February 2015
The Insurance Directorate has published two Information Notes and the latest edition of our Solvency II Newsletter to assist undertakings in their preparations for Solvency II implementation.
10 November 2014
In order to assist us in our resource planning and process design, the Central Bank of Ireland is conducting a survey on key Solvency II phasing-in approvals for (re)insurance undertakings (excluding Groups and Internal Model related approvals). As undertakings should be aware, the Solvency II Directive 2009/138/EC, Article 308a outlines "phasing-in approvals", which firms may seek Central Bank approval for in 2015. If approved, the items or decisions will become effective from 1 January 2016.
The survey was issued today, 10 November 2014, to compliance officers of all (re)insurance undertakings and it will close on 12 December 2014. Should undertakings have any queries on the survey, please e-mail email@example.com
7 August 2014
As previously advised and in order to supplement on-going supervisory engagement during the preparatory period, the Central Bank of Ireland will conduct surveys on preparedness for Solvency II in both 2014 and 2015. These surveys are aimed at assessing undertakings’ progress towards complying with certain guidelines on preparing for Solvency II published by the Central Bank in November 2013 (namely System of Governance and Submission of Information to the Central Bank Guidelines).
The 2014 survey was issued today, Thursday 7th August, to compliance officers of all participating undertakings. This online survey will remain open until close of business on Friday 26th September 2014. Should you have any queries on the above, please email firstname.lastname@example.org
4 July 2014
The Central Bank of Ireland - FLAOR Reporting Tool for Medium-Low and Low impact (re)insurance undertakings is now available to submit FLAOR reports to the Central Bank of Ireland. Further information can be found under "Reporting Requirements" in the respective Life, Non-Life and Reinsurance pages sections.
3 June 2014
EIOPA has launched a consultation on the first set of Guidelines for Solvency II. They are inviting comments from stakeholders on the Guidelines and their Impact Assessment for Solvency II. Comments are due by 29 August 2014 and should be submitted using the template provided on EIOPA’s website.
23 May 2014
The Omnibus II Directive (2014/51/EU) was published in the Official Journal of the European Union on 22 May 2014. This Directive substantially amends the Solvency II Directive (2009/138/EC). The text of the Omnibus II Directive can be found here.
7 May 2014
On 30 April 2014, EIOPA published the Solvency II Technical Specifications for the preparatory phase that will provide a ground for undertakings to value assets and liabilities and to calculate solvency/minimum capital requirements and own funds. These are the Technical Specifications referred to in the Central Bank of Ireland Guidelines on Preparing for Solvency II and can be found here.
2 April 2014
The European Insurance and Occupational Pensions Authority (EIOPA) launched it's consultation on the 1st Set of Implementing Technical Standards for Solvency II on 1 April 2014.
EIOPA are inviting comments on the first set of draft Implementing Technical Standards (ITS) for Solvency II. The first set of ITS define the processes for the approval of the Matching Adjustment, Ancillary Own Funds, Undertaking-Specific Parameters, Internal Models and Special Purpose Vehicles and the joint decision process on Group Internal Models. As of 1 April 2015, companies can begin submitting such applications to supervisors.
The consultation will end on 30 June 2014. Both the consultation papers and the associated templates for submitting comments can be viewed here on the EIOPA website.
1 April 2014
The Central Bank’s Online Reporting System has been modified to include an upload facility for High and Medium-High impact (re)insurance undertakings and groups to submit their Solvency II - Forward Looking Assessment of Own Risks (FLAOR) reports. The accompanying User Manual is available in the Reporting Requirements section of the Life, Non-Life and Reinsurance pages. Further information on the FLAOR can be found in the CBI Preparatory Guidelines on Preparing for Solvency II - FLAOR.
11 March 2014
The Omnibus II Directive was formally adopted by the European Parliament in its plenary session today. This marks a significant milestone ahead of implementation of Solvency II on 1 January 2016. It is expected that the Omnibus II Directive will be formally adopted by the Council of the EU in the coming weeks before publication in the Official Journal of the EU.
17 February 2014
On 17 February 2014, EIOPA published Errata amending its Guidelines on the Submission of Information to National Competent Authorities. Consequently the Central Bank has issued Errata to make the corresponding changes in our related Guidelines. The document is available in the Guidelines section.
4 February 2014
On 31 January 2014 EIOPA published its timeline for the delivery of Solvency II Implementing Technical Standards (ITS) and Guidelines. These will form part of the regulatory and supervisory framework for the technical implementation of the Solvency II regime from the first day of application - 1 January 2016. EIOPA will prepare each of the ITS and Guidelines in two separate phases so there are 4 significant documents in total. The timeline and other related information are available here on the EIOPA website. Attention is drawn to the Public Consultation dates when stakeholders will have a final opportunity to input to the process.
4 November 2013
The Central Bank today published the package of Central Bank of Ireland Guidelines on Preparing for Solvency II. Copies of the guidelines are available here.
The Central Bank guidelines are issued in response to the EIOPA Guidelines on Preparing for Solvency II, which were issued to National Competent Authorities on 31 October 2013 (see below).
31 October 2013
Following from the update of of 27 September 2013, EIOPA has now published the translated versions of the final Guidelines for the preparation of Solvency II.
3 October 2013
On 2 October, the European Commission published a Proposal for a Directive postponing the application date of Solvency II (this has been referred to previously as the Quick Fix II Directive). The text proposes a transposition date of 31 January 2015 and implementation date of 1 January 2016. The proposal and an accompanying statement can be accessed on the European Commission website here.
27 September 2013 - Publication of Guidelines related to the preparation for Solvency II
EIOPA has published the final Guidelines for the preparation of Solvency II following their approval by the Board of Supervisors this week. EIOPA intends to publish the Guidelines in all official EU languages by end-October 2013. The Central Bank of Ireland will publish its corresponding guidelines shortly thereafter.
13 September 2013 - Update on Omnibus II
The European Parliament has recently revised the indicative date for the plenary vote on the Omnibus II Directive. The plenary is scheduled to agree text arising from the political trilogue meetings which are expected to conclude well in advance of that date.
Please refer to the "Forecasts" section here on the European Parliament website.
17 June 2013 - EIOPA Long Term Guarantee Assessment
On 14 June 2013 EIOPA published the results of its Long Term Guarantee Assessment. The report and related appendices are available here on the EIOPA website.
The National Report for Ireland is also available to view or download in the Publications section of our website or here.
30 May 2013
On 24th May 2013 the Central Bank of Ireland hosted an Industry Briefing on Guidelines on Preparing for Solvency II. The presentations from the event are available by clicking on the Events button in the right hand navigation bar or by clicking here.
27 March 2013
EIOPA launched a public consultation on Guidelines related to the preparation for Solvency II on 27 March 2013. The purpose of the Guidelines is to support both National Competent Authorities (NCA's) and undertakings in their preparation for the Solvency II requirements.
The Guidelines cover the 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 National Competent Authorities (NCA's); pre-application of internal models.
The public consultation will end on 19 June 2013. EIOPA invites comments from all interested parties. The relevant documentation can be accessed via the Open Consultations section of the EIOPA website.
20 December 2012
EIOPA has published an Opinion on the Interim Measures regarding Solvency II on its website. Between now and March 2013, EIOPA, with input from National Supervisory Authorities, will work on producing the guideline referred to in paragraph 13 of the opinion which will set out further detail. EIOPA plans to publically consult on this guideline, probably in Q2 2013.
Solvency II Implementation Update
Due to continuing uncertainties surrounding certain calibration issues and the timing of a final quantitative impact assessment, the envisaged implementation date of 1 January, 2014 will not now be met. The Central Bank encourages the European authorities to provide certainty as to a revised implementation date as soon as possible.
The Central Bank has already had discussions with representatives of the insurance industry regarding Solvency II and has decided not to bring forward proposals for early Solvency II implementation independently of action by EIOPA or other regulators. The Central Bank of Ireland is working closely with EIOPA to achieve a consistent and convergent approach across the EU to Solvency II implementation. This may entail early adoption by 2014 of some elements of Solvency II, primarily, but not limited to, Pillar 2. Aspects under discussion currently include systems of governance including risk management and ORSA, related reporting to supervisors, pre-application of internal models, along with supervisory review in relation to these elements. EIOPA is expected to publish a statement on the matter on its website during December.
The Central Bank recognises the substantial efforts by many firms in preparing for Solvency II and we appreciate that the current situation presents challenges in relation to the planning and management of Solvency II work programmes. In light of EIOPA’s forthcoming proposals, we recommend that firms focus on Pillar 2 aspects of Solvency II, in preparation for interim requirements. Once a revised implementation date for Solvency II is known, firms can then rework their full programme plans accordingly.
With regard to the Internal Model pre-application process, we will be working with firms over the coming weeks and months to revise the Internal Model pre-application plan. This will be informed by discussions with the relevant firms but will have regard to the revised implementation date for Solvency II.
Should you have queries on the above, please email email@example.com
As final agreement on Omnibus II has not yet been reached it is widely accepted that the proposed timeline of Solvency II transposition by 30 June 2013 and implementation by 1 January 2014 is unrealistic. The European Parliament has recently rescheduled the plenary vote of the Omnibus II Directive from 20 November 2012 to 11 March 2013 (see forecasts on the European Parliament website). As yet, a revised timetable for Solvency II has not been set out. Given the uncertainty around the range of potential outcomes we would encourage industry to maintain its focus on Solvency II. When we have further clarity as to the revised timeline, we will communicate this to industry.
On 10th July, EIOPA published a report on the outcome of the public consultation on Solvency II reporting and disclosure requirements for Insurers. EIOPA recommends that industry should use the current reporting package as a basis to start the implementation phase.
The press release relating to the report can be accessed here and the corresponding report can be accessed here.
On 12th July, EIOPA published a report on the outcome of the public consultation on the ORSA. The press release relating to the report is available here and the corresponding report is available here.
As part of the reporting requirements under Solvency II, EIOPA is proposing a set of Quantitative Reporting Templates (QRTs). It publically consulted on a draft of these during the period November 2011 - January 2012, and is currently revising the draft in light of comments received.
The EIOPA QRTs leave scope for individual countries to define national templates, covering local market specifics and local legal requirements. These national templates are referred to as national specificities. Within the Central Bank, we propose to communicate with the (re)insurance industry regarding our national reporting requirements early in 2013. This date has been chosen because there is a clear dependency on the finalisation of the QRTs at an EIOPA level, and that is not anticipated until late 2012. Nevertheless we can state at this time that there may be additional reporting requirements for profit and loss information e.g. income statements by line of business.
The European Commission has recently drafted a short Directive to amend the original Solvency II implementation date of 31 October 2012 (as per Article 309, Directive 2009/138/EC). This is to take into account the timeline for finalisation of Omnibus II. The proposed date for transposition of Solvency II by Member States is 30 June 2013 while implementation of Solvency II remains targeted for 1 January 2014. The purpose of the mini-Directive is to clarify the legal position on the timing of the application of the Solvency II Directive and to avoid any legal uncertainty for the current Solvency I regime if Omnibus II were to be delayed beyond 31 October 2012.
The plenary vote on Omnibus II in the European Parliament has been rescheduled from 17 April 2012 to 10 September 2012 (view the European Parliament notice here). This change of the plenary vote date was anticipated, in order to align with the ECON vote on 21 March 2012 and to allow sufficient time for the negotiations between the Parliament, the Commission and the Council of Ministers to take place. EIOPA's overall implementation timetable for Solvency II does not change as a result of this rescheduling. Our working assumptions on the timeline for Solvency II remain as follows:
- Solvency II will be transposed by Member States by 1 January 2013
- During 2013, there will be certain requirements for undertakings to report to supervisors on their progress towards full Solvency II implementation. Undertakings will also be able to submit formal requests to national supervisors for specific approvals (e.g. internal models, undertaking specific parameters, ancillary own funds) where it is intended to use these from the start of full implementation. The specific requirements for undertakings in 2013 will be outlined when Omnibus II is finalised.
- Solvency II comes in to full effect for all undertakings on 1 January 2014
In light of recent press and industry speculation and queries received regarding potential changes to the implementation date of Solvency II, the Central Bank of Ireland would like to provide this update.
At its Annual Conference on November 16th 2011, EIOPA provided an update on its on-going work for preparing the future implementation of the Solvency II directive and the timeline of activities necessary to prepare for Solvency II. The timing of activities is based on assumptions around the development of the political process: firstly, the approval of the Omnibus II directive by the European Parliament and the Council of the European Union and the publication of the proposal for a Delegated Act by the Commission in the first half of 2012; secondly, a phasing-in period of the new regime during 2013; and finally, the application of Solvency II as of 1 January 2014. EIOPA emphasizes that the work plan for the consultation may be adjusted depending on the realisation of these assumptions. Further details can be found on the EIOPA website or in the relevant Press Release.
The European Parliament and Council, in separate proposals, have drawn the distinction between implementation of Solvency II by Member States (1 January 2013) and application of Solvency II to insurance and reinsurance undertakings (1 January 2014).
We remind all companies that these proposals to defer the implementation date are still proposals and have not been agreed at this point in time.
If the full implementation of Solvency II for companies is delayed until 2014, it is clear that there will still remain significant additional requirements during 2013 for companies in terms of reporting and demonstrating to supervisors their readiness for full Solvency II implementation. Therefore, proposals for full application of the Solvency II requirements in 2014 should not be interpreted as allowing substantial extra time to prepare. We recommend that all companies continue to progress their individual Solvency II plans and remain focused on implementation
We will further update our position when Omnibus 2 is fully agreed and when implementation dates for undertakings and supervisors have been finalised. That update will include an outline of our plans with regard to formal application for internal models and other approvals.
Solvency II is based on a three pillar approach:
Pillar 1 covers the quantitative requirements of Solvency II. Within this pillar there are two capital requirements - the Solvency Capital Requirement (SCR) and the Minimum Capital Requirement (MCR) – representing different levels of supervisory intervention. The SCR is a risk-based requirement and acts as the key solvency control level. Two methods for the calculation of the SCR have been set out: the European Standard Formula or firms’ own internal models. The SCR will cover all the quantifiable risks an insurer or reinsurer faces. Risk mitigation techniques are also a salient factor in relation to SCR calculations. The MCR, in comparison, is a lower requirement. A breach of the MCR triggers the ultimate supervisory intervention of the withdrawal of authorisation.
Pillar 2 is concerned with qualitative requirements such as insurance undertakings’/groups’ risk management and control systems. Falling under Pillar 2 is the Own Risk and Solvency Assessment (ORSA). The ORSA is an insurance firm’s own assessment of its capital needs taking into account the specific risk profile and strategy of the firm. It analyses areas not fully reflected by the SCR. It also requires a multi-year projection of available capital and capital required. (Perceived deficiencies in the ORSA may result in additional capital requirements).
Pillar 3 covers supervisory reporting and disclosure. Firms will need to disclose certain information publicly, which will bring in market discipline and aid in ensuring the stability of insurers and reinsurers. In addition, firms will be required to report a greater amount of information to their supervisors. The intention is to bring market discipline to bear on firms. Equally, supervisory authorities will be required to be transparent about the detail of their implementation of the Solvency II regime.