EIOPA Insurance Regulation

EIOPA Insurance Regulation

The European Insurance and Occupational Pensions Authority (EIOPA) oversees the insurance and pensions sectors across the EU.

EIOPA Mandate

Objectives

1. Protect policyholders and pension beneficiaries
2. Promote stable, well-functioning financial markets
3. Maintain financial stability

Solvency II Framework

Three Pillars

Pillar 1 - Quantitative Requirements

• Solvency Capital Requirement (SCR)

  • 99.5% VaR over one year
  • Standard formula or internal model

• Minimum Capital Requirement (MCR)

  • Absolute floor
  • Triggers ultimate supervisory action

• Own Funds

  • Tier 1, 2, 3 classification
  • Eligibility limits

• Technical Provisions

  • Best estimate liabilities
  • Risk margin

Pillar 2 - Governance and Supervision

• System of governance
• Risk management function
• Actuarial function
• Compliance function
• Internal audit
• ORSA (Own Risk and Solvency Assessment)

Pillar 3 - Reporting and Disclosure

• Public disclosure - Solvency and Financial Condition Report (SFCR)
• Supervisory reporting - Regular Supervisory Report (RSR)
• Quantitative Reporting Templates (QRTs)

ORSA Requirements

Purpose

• Forward-looking assessment
• Own view of risks
• Capital needs projection

Key Elements

1. Overall solvency needs
2. Continuous compliance
3. Deviation from SCR assumptions

Product Oversight and Governance (POG)

Manufacturer Obligations

• Target market identification
• Product testing
• Distribution strategy
• Ongoing monitoring

Distributor Obligations

• Understand target market
• Obtain information from manufacturer
• Suitability/appropriateness

Insurance Distribution Directive (IDD)

• Conduct of business rules
• Information requirements
• Cross-selling rules
• Remuneration transparency