Insurance Regulatory eBulletin - EIOPA

EIOPA publishes Discussion Paper on national insurance guarantee schemes

On 30 July EIOPA published a Discussion Paper on resolution funding and national insurance guarantee schemes as a follow-up to its Opinion on the harmonisation of recovery and resolution frameworks for (re)insurers across the Member States published in 2017.

The paper notes that there are many different sources of resolution funding available for failing insurers within the EU states. The EU landscape of insurance guarantees schemes (IGSs) is also significantly fragmented, with the existing schemes differing quite substantially in terms of financing, functions, mandate and coverage. In its paper, EIOPA has analysed the need for potential harmonisation of IGSs and is seeking feedback from stakeholders its assessment of the desired features of national IGSs.

At this stage, EIOPA has not reached a conclusion on whether action at the European level is needed. EIOPA will continue its analysis, taking into account the feedback from stakeholders, and draw definite conclusions where appropriate in a next stage.

The discussion paper is open for comments until 26 October 2018.

EIOPA publishes a third paper on systemic risk and macro-prudential policy in the insurance sector

On 31 July EIOPA published the third in a series of papers with the aim of contributing to the debate on systemic risk and macro-prudential policy. Until now, the debate has mainly focused on the banking sector due to its prominent role in the recent financial crisis. Through this series of papers, EIOPA is aiming to ensure that any further extension of the debate to the insurance sector fully reflects the industry's specific nature.

The third paper builds on and supplements the previous ones by carrying out an initial assessment of other potential tools or measures to be included in a macro prudential framework designed for insurers. EIOPA carried out its analysis by focusing on four categories of tools:

• capital and reserving-based tools;
• liquidity-based tools;
• exposure-based tools; and
• pre-emptive planning.

The paper focuses on whether a specific instrument should or should not be further considered especially in terms of future work on reviewing Solvency II. EIOPA notes these initial assessments should be understood as a first step in the process of review and not as formal proposals.

EIOPA calls for a deeper understanding of cyber risk

On 2 August, EIOPA published its report "Understanding Cyber Insurance - A Structured Dialogue with Insurance Companies". EIOPA sees cyber risk as a growing concern for institutions, individuals, and financial markets noting that in less than five years, it has surged to the top of the list of global risks for business. The increasing number of cyber incidents, the continued digital transformation and new regulatory initiatives in the EU are expected to raise awareness and to boost the demand for cyber insurance.

This report is the first attempt by EIOPA to enhance the level of understanding of cyber risk underwriting with a focus on the European insurance market and it concludes further work in the field is necessary. This led to EIOPA including a combination of qualitative and quantitative questions on cyber risk in its 2018 Insurance Stress Test.

Q&A on regulation

On 10 August, EIOPA published new sets of questions and answers on:
• (EU) No 2015-2450 templates for the submission of information to the supervisory authorities;
• EU_No_2015-2011_lists of regional governments local authorities exposures;
• Commission Delegated Regulation (EU) 2015-35 supplementing Directive 2009-1;
• Guidelines on the loss-absorbing capacity of technical provisions and deferred taxes; and
• Directive 2009-138-EC of 25 of November of 2009 of the European Parliament.