Annexes to COM(2018)169 - Application of the Solvency II Directive as regards the supervision of insurance undertakings in a group, and the assessment of a transition period for retirement provision

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dossier COM(2018)169 - Application of the Solvency II Directive as regards the supervision of insurance undertakings in a group, and the assessment ...
document COM(2018)169 EN
date April  5, 2018
agreements among supervisors.

III.Transitional period for life insurance undertakings’ occupational retirement provision business

Article 308b(15) of Solvency II, as amended by Article 63 of the IORP II Directive, requires the Commission to report on the operation of the transitional period referred to in the introduction:

‘15.    Where, on the entry into force of this Directive, home Member States applied provisions referred to in Article 4 of Directive (EU) 2016/2341, those home Member States may continue to apply the laws, regulations and administrative provisions that had been adopted by them with a view to complying with Articles 1 to 19, Articles 27 to 30, Articles 32 to 35 and Articles 37 to 67 of Directive 2002/83/EC as in force on 31 December 2015 for a transitional period expiring on 31 December 2022.

[..]

By 31 December 2017, the Commission shall submit a report to the European Parliament and to the Council on whether the period referred to in the first subparagraph should be extended, taking account of changes to Union or national law resulting from this Directive.’

While the legislation foresees a report at the end of 2017, the transitional period does not expire until 31 December 2022, so the end of 2017 can be considered somewhat early to draw definitive conclusions on its operation. At this stage, the Commission does not have new elements in its possession that would justify a further extension of the transitional period, but it will continue to monitor the situation from the entry into application of the IORP II Directive on 13 January 2019. The monitoring will contribute to the review of that Directive, which is due by 13 January 2023 (see Article 62 of the IORP II Directive).

IV.Conclusion

Article 242(1) of Solvency II provides that the Commission’s report on the application of Title III (group supervision) may be accompanied with legislative proposals.

As Solvency II is due for general evaluation in 2020 and given the importance of a stable regulatory framework, the Commission considers that only one of the areas identified above requires legislative amendment at this stage: the area of group internal models, where divergences among Member States have been identified and EIOPA needs enhanced powers to bring about convergence.

However, given the urgency of the matter and the opportunity provided by the Commission’s package of proposals to review the functioning and financing of European supervisory authorities (as adopted on 20 September 2017), action has already been taken on this. The package included a legislative proposal to amend Solvency II 9 so as to mitigate and prevent divergences in the supervision and approval of group internal models. Article 2 of the proposal includes amendments to Solvency II to:

·give EIOPA a greater role in ensuring supervisory convergence in the area of internal model applications (at solo and group level) and with respect to informationsharing on such applications; and

·allow EIOPA to issue opinions in this regard and assist in the settlement of disputes between supervisory authorities, at their request, on its own initiative or, in certain circumstances, at the request of concerned undertakings.

The amendments also provide that EIOPA should prepare annual reports on this matter. This will allow close monitoring of the situation on internal model applications, including the bringing to light of outstanding concerns as regards supervisory convergence in this area.

As to the transitional period for the occupational retirement provision business of life insurance undertakings, the Commission may take a decision nearer the end of that period (end 2022) concerning its possible extension. If a decision is taken to extend the period, a legislative proposal could be introduced in good time before the end of 2022.

(1)

     Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the takingup and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1), subsequently amended by Directive 2011/89/EU (Financial Conglomerates Directive), Directive 2012/23/EU, Council Directive 2013/23/EU, Directive 2013/58, Directive 2014/51/EU (‘Omnibus II’ Directive) and Directive 2016/2341/EU (‘IORP II’ Directive on Institutions for Occupational Retirement Provision).

(2)

     Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37), which entered into legal force on 12 January 2017 and must be transposed in the Member States by 13 January 2019.

(3)

     Article 242(2) of Solvency II requires the Commission to make an assessment of the benefits of enhancing group supervision and capital management within a group of insurance or reinsurance undertakings by 31 December 2018. The Commission is to present the report to the European Parliament and the Council by the end of 2018.

(4)

https://eiopa.europa.eu/Publications/Consultations/Report%20to%20the%20European%20Commission%20on%20the%20Application%20of%20Group%20Supervision.pdf

(5)

     Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48).

(6)

     Where the participating insurance or reinsurance undertaking or the insurance holding company or the mixed financial holding company referred to in Article 213(2)(a) and (b) is itself a subsidiary undertaking of another insurance or reinsurance undertaking or of another insurance holding company or of another mixed financial holding company which has its head office in the Union, Articles 218 to 258 shall apply only at the level of the ultimate parent insurance or reinsurance undertaking, insurance holding company or mixed financial holding company which has its head office in the Union.

(7)

     Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 12, 17.1.2015, p. 1).

(8)

      https://eiopa.europa.eu/Publications/Reports/EIOPA-BoS-17-336rev2_EIOPA%202 017 %20report%20on%20the%20use%20of%20Capital%20Add%20Ons.pdf

(9)

     Proposal for a Directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments and Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)) (COM(2017) 537 final). See also COM (2017) 536 final (proposal for a Regulation amending various regulations, including the EIOPA founding Regulation).