Changes from report parliamentary committee draft to plenary report

Added▌

RemovedDirective 2009/138/EC

Added2. The supervisory authority shall, within two months of receipt, assess the request and inform the undertaking of its approval or rejection, as well as of the proportionality measures granted. Where the supervisory authority approves the use of proportionality measures under certain terms or conditions, the approval decision shall contain the reasons for those terms and conditions. A decision of the supervisory authority to oppose the use of one or several proportionality measures listed in the request submitted by the undertaking shall be done in writing, and state the reasons for the supervisory authority’s decision. Such reasons shall be linked to the risk profile of the undertaking,

RemovedArticle 1 – paragraph 1 – point 26 – point c, Article 51 – paragraph 1c: deleted / (deleted) / (deleted) / (deleted)

Added3. The supervisory authority may request any further information that is necessary to complete the assessment. The assessment period referred to in paragraph 2 shall be suspended for the period between the date of request for information by the supervisory authorities and the receipt of a response thereto by the concerned undertaking. Any further requests by the supervisory authority shall not result in a suspension of the assessment period.

RemovedThere is little benefit of splitting the annual report into two parts.

Added▌

RemovedDirective 2009/138/EC

Added5. Approval to use proportionality measures may be amended or withdrawn at any point in time if the insurance or reinsurance undertaking’s risk profile has changed. The authority shall state in writing the reasons of its decision accordingly.

RemovedArticle 1 – paragraph 1 – point 26 – point d – introductory part, Article 51 – paragraph 2 – subparagraph 3: (d) the third subparagraph of paragraph 2 is deleted.

Added▌ ▌

RemovedDeletes reference to transition period that has already expired.

Added▌

RemovedDirective 2009/138/EC

Added▌

RemovedArticle 1 – paragraph 1 – point 26 – point d, Article 51 – paragraph 2: deleted / (deleted) / (deleted)

Added(14) in Article 30(2), the first subparagraph is replaced by the following:

RemovedThere is little benefit of splitting the annual report into two parts.

Added‘Financial supervision pursuant to paragraph 1 shall include verification, with respect to the entire business of the insurance and reinsurance undertaking, of its system of governance, of its state of solvency, of the establishment of technical provisions, of its assets and of the eligible own funds, in accordance with the rules laid down or practices followed in the home Member State under provisions adopted at Union level.’;

RemovedDirective 2009/138/EC

Added(15) the following Article 33a is inserted:

RemovedArticle 1 – paragraph 1 – point 26 – point e, Article 51 – paragraph 3: deleted / (deleted) / (deleted)

Added‘Article 33a Supervisory cooperation between home and host supervisory authorities

RemovedThere is little benefit of splitting the annual report into two parts.

Added1. In the event of significant cross-border activities ▌, the supervisory authority of the home Member State and the supervisory authority of the host Member State shall cooperate with each other to assess whether, in the framework of the supervisory review process, the insurance undertaking has a clear understanding and a sound management of the risks that it faces, or may face, in the host Member State.

RemovedDirective 2009/138/EC

AddedThis cooperation shall be tailored to the risks entailed by the significant cross-border activities and shall cover at least the following aspects:

RemovedArticle 1 – paragraph 1 – point 26 – point e, Article 51 – paragraph 4: deleted / (deleted) / (deleted) / (deleted) / (deleted)

Added(a) the system of governance including the ability of the head office’s management to understand the cross-border market specificities, risk management tools, internal controls in place and compliance procedures for the cross-border business;

RemovedThere is little benefit of splitting the annual report into two parts.

Added(b) outsourcing ▌ and distribution partnerships;

RemovedDirective 2009/138/EC

Added(c) business strategy and claims handling;

RemovedArticle 1 – paragraph 1 – point 26 – point e, Article 51 – paragraph 5: deleted

Added(d) consumer protection.

RemovedThere is little benefit of splitting the annual report into two parts.

Added2. The supervisory authority of the home Member State shall, in a timely manner, inform the supervisory authority of the host Member State about the outcome of its supervisory review process related to the cross-border activity where potential issues of compliance with the provisions applicable in the host Member State have been identified.

RemovedDirective 2009/138/EC

Added▌

RemovedArticle 1 – paragraph 1 – point 26 – point e, Article 51 – paragraph 6: 6. By way of derogation from paragraph 1 of this Article, insurance undertakings that are classified as low-risk profile undertakings may disclose only the quantitative data required by the implementing technical standards referred to in Article 56 in the solvency and financial condition report, provided that they disclose a full report containing all the information required in this Article every three years.

Added(16) Article 35 is amended as follows:

RemovedDirective 2009/138/EC

Added(a) in paragraph 1, the first sentence is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 27, Article 51a: deleted / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted)

Added‘Member States shall require insurance and reinsurance undertakings to submit to the supervisory authorities the information which is necessary for the purposes of supervision, taking into account the objectives of supervision laid down in Articles 27 and 28 and the general principles of supervision laid down in Article 29, in particular the principle of proportionality.’;

RemovedThis obligation is extremely costly and will provide little added value if national supervisors have done their work.

Added(b) the following paragraph 5a is inserted:

RemovedDirective 2009/138/EC

Added‘5a. Taking into account the information required in paragraphs 1 and 2 and the principles set out in paragraphs 3 and 4, Member States shall ensure that insurance and reinsurance undertakings submit to the supervisory authorities a regular supervisory report that comprises information on the undertaking's business and performance, system of governance, risk profile, valuation for solvency purposes and capital management over the reporting period.

RemovedArticle 1 – paragraph 1 – point 36, Article 77 – paragraph 3 a (new): (36) in Article 77, the following paragraphs 3a, 5a, 6 and 7 are added: / 3a. The risk margin for the entire portfolio of insurance and reinsurance obligations shall be calculated using the following formula: / RM = CoC * Σt≥0 (0.9t*SCR(t)/((1+r(t+1))t+1) / where / (a) CoC denotes the Cost-of-Capital rates / (b) the sum covers all integers including zero / (c) SCR(t) denotes the Solvency Capital Requirement after t years / (d) r(t+1) denotes the basic risk-free interest rate for the maturity of t+1 years.

AddedThe frequency of the regular supervisory report shall be:

RemovedDirective 2009/138/EC

Added(a) every five years, for low-risk profile undertakings;

RemovedArticle 1 – paragraph 1 – point 36, Article 77 – paragraph 5 a (new): 5a. The Cost-of-Capital rate referred to in paragraph 5 shall be assumed to be equal to 4 %.

Added(b) ▌every three years for insurance and reinsurance undertakings other than low-risk profile undertakings.

RemovedThe cost of capital should be set by the legislator.

AddedIf deemed necessary, a supervisory authority may require supervised undertakings to report more frequently;’;

RemovedDirective 2009/138/EC

Added(c) paragraphs 6, 7 and 8 are deleted;

RemovedArticle 1 – paragraph 1 – point 36, Article 77 – paragraph 7: 7. Notwithstanding paragraph 6, insurance undertakings that are classified as low-risk profile undertakings or that have obtained prior supervisory approval may use a prudent deterministic valuation of the best estimate for life obligations with options and guarantees that are not deemed material.;