1. SOLVENCY II
1.1 Implementing Regulation on technical information for calculation of technical provisions and basic own funds for Q2 2020 published in the Official Journal of the European Union
On 13 May 2020, the Commission Implementing Regulation (EU) 2020/641 which lays down technical information for the calculation of technical provisions and basic own funds for reporting from 31 March 2020 until 29 June 2020 under the Solvency II Directive (2009/138/EC) (Solvency II Directive) was published in the Official Journal of the European Union.
The Implementing Regulation sets out the technical information to be used by reinsurers and insurers when calculating technical provisions and basic own funds for reporting with reference dates in Q2 2020.
To ensure uniform conditions for insurers and reinsurers calculating technical provisions and basic own funds, the Solvency II Directive requires that technical information on relevant risk-free interest rate term structures, fundamental spreads for the calculation of the matching adjustment and volatility adjustments must be laid down for every reference date. In each case, the technical information is based on market data related to the end of the last month preceding the first reporting reference date to which the relevant Implementing Regulation applies.
The European Commission adopted the Implementing Regulation on 12 May 2020. It enters into force on 14 May 2020 and applies from 31 March 2020.
The Commission Implementing Regulation (EU) 2020/641 can be accessed here.
1.2 European Court of Justice ruling on insured's right to choose lawyer under Solvency II Directive covers mediation
The Court of Justice of the EU (ECJ) has ruled on a reference for a preliminary ruling concerning an insured person's right under the Solvency II Directive to choose their own lawyer in proceedings relating to a contract for legal expenses insurance in the case of Orde van Vlaamse Balies and Ordre des barreaux francophones et germanophone v Ministerraad (Case C-667/18).
The ECJ was asked to consider whether Article 201(1)(a) of the Solvency II Directive must be interpreted as meaning that the term "proceedings" referred to in the article includes judicial or extrajudicial mediation proceedings in which a court is involved or is capable of being involved.
The ECJ ruled that "proceedings" did include judicial or extrajudicial mediation and held that "...any stage, even a preliminary stage, which is capable of leading to proceedings before a judicial body must be regarded as falling within the term 'proceedings'". The decision reflects the ECJ's approach of a broad interpretation of the rights of insured persons which seeks to provide adequate protection for the interests of insured persons.
The case can be accessed here.
2. EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY (EIOPA)
2.1 EIOPA publishes second report on costs and past performance of insurance based investment products and personal pension products
On 6 April 2020, the European Insurance and Occupations Pensions Authority (EIOPA) published its second report on costs and past performance of insurance-based investments products (IBIPs) and personal pension products (PPPs) in the European Union.
The report was published following a request from the European Commission to the European Supervisory Authorities (ESAs) to periodically report on the costs and past performance of retail investment products. The report provides an analysis of costs for 2018 and past performances for the period 2014-2018.
The study documents the impact of market volatility on returns for different product types. The overall performance in 2018 was the lowest for five years and EIOPA also found that costs continue to have a significant impact on net returns, confirming a trend observed last year.
A copy of the report can be accessed here.
2.2 EIOPA publishes discussion paper on insurance value chain and new business models arising from digitalisation
On 10 June 2020, EIOPA published a discussion paper on the insurance and reinsurance value chain and new business models arising from digitalization. The paper will be a first step in examining the challenges arising from the new business models of the insurance value chain, as a result of new technologies in the insurance market. The discussion paper contains 21 questions. EIOPA will assess the feedback to the discussion paper in planning its next steps.
Feedback on the discussion paper can be submitted, via the EU Survey Tool, by September 07, 2020.
The press release can be accessed here, the discussion paper can be accessed here and the EU Survey Tool can be found here.
2.3 EIOPA published the findings of its peer review of the Regular Supervisory Report
On 18 June 2020, EIOPA published the findings of its peer review of the Regular Supervisory Report (RSR). The peer review examined how and to what extent the proportionate approach set out under Delegated Regulation (EU) 2015/35 has been implemented among national competent authorities (NCAs). It also aims to determine if further convergence is needed on the frequency of submission of RSRs.
In the peer review, EIOPA analysed legal and regulatory frameworks and national supervisory practices across 31 NCAs in relation to decisions on the frequency of submission of the RSR, and the communication of those decisions to undertakings. The peer review also issued a number of recommended actions that NCAs should take to bring about greater convergence in their approaches and a more consistent implementation of the principle of proportionality. NCAs are expected to have implemented the recommended actions targeting supervisory shortcomings by 2022.
EIOPA will take a number of actions on foot of the findings of the peer review to further achieve supervisory convergence in this area and will develop further guidance in relation to the minimum requirement for submission of the full RSR and its mandatory assessment by NCAs, as well as the communication of the frequency of the RSR.
A copy of the peer review can be accessed here.
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