Comments by the Association of Public Insurers on the Request for Advice to EIOPA dated 11 February 2019 and the Consultation Paper dated 15 October 2019
(Request to EIOPA for technical advice on the review of the Solvency II Directive 2009/138/EC)
(EIOPA-BoS-19/465 Consultation Paper on the Opinion on the 2020 review of Solvency II)
General comments
Since 1 January 1 2016, Solvency II has been in force as a comprehensive supervisory regime. The regulatory framework is intended to make solvency requirements more appropriate to the risks and to strengthen risk management in order to reduce the risk of the insolvency of an insurer. At the same time, the Directive serves to harmonize supervisory law in the European single market. The legal foresees evaluations at various points, which EIOPA carries out on behalf of the European Commission.
Just like the other European insurance companies, the companies in our group implemented the regime with great effort and it is now used consistently. Our association comprises ten public primary insurance groups, which together are the second strongest force in the German insurance industry. They are medium-sized insurance companies that operate regionally and do not use internal models.
In applying Solvency II, we noticed that not all the assumptions of Solvency II are in line with the practices of our member companies. We believe the highly complex three-pillar concept needs to be better tailored to its users and the market conditions. At the same time, a higher level of transparency – especially in the calibration of natural catastrophe risks – is required in order to be able to better assess the appropriateness of modelling the risks, and in a second step to discuss concrete adjustments to the standard formula to map the risks more adequately.
We expressly welcome the comprehensive evaluation process. It is important for us that it provides a real opportunity for the necessary correction of the supervisory regime of the Solvency II framework, accompanied by a holistic and solid impact assessment. For us, it is essential that this process is conducted with the necessary openness and that it offers a real opportunity to analyse the criticisms by the insurance companies concerned, as well as to correct the Solvency II regulatory regime. This is especially true for EIOPA’s holistic impact analysis. Individual proposals, which might be contradictory as sum, need to be corrected until EIOPA’s final proposal.
