On October 31, 2017, EIOPA published a document containing the first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation ((EU) 2015/35) (EIOPAA-BoS-17/280).
The advice covers the following areas:
- Simplified calculations of capital requirements in the Solvency Capital Requirement (“SCR“) standard formula.
- Reducing reliance on external credit ratings in the calculation of the SCR.
- Exposures guaranteed and exposures to regional governments and local authorities (“RGLA“).
- Risk-mitigation techniques.
- Undertaking specific parameters.
- Look-through for investment related undertakings.
- Loss-absorbing capacity of deferred taxes (“LAC DT“). The advice contains factual information only; this issue will be addressed further in EIOPA’s second set of advice to the Commission.
EIOPA published a consultation paper on the advice in July 2017 (EIOPA-CP-17/004), which followed on from a discussion paper published in December 2016 (EIOPA-CP-16/008). EIOPA has also published a final report that contains details of the feedback that it received on EIOPA-CP-16/008 and EIOPA-CP-17/004, as well as the final text of the advice and a summary of comments received to EIOPA-CP-17/004.
EIOPA is providing its advice in two sets. It will send the second set of advice to the Commission by the end of February 2018. EIOPA issued a call for evidence relating to this second tranche of advice in April 2017. This will address issues such as policy proposals on LAC DT to increase supervisory convergence, risk margin, catastrophe risks, non-life and life underwriting risks, non-proportional reinsurance covers, unrated debt and unlisted equity and own funds. EIOPA plans to consult on these issues before the end of 2017.