Changes from report parliamentary committee draft to plenary report

Added(d) paragraph 9 is replaced by the following:

RemovedDirective 2009/138/EC

Added‘9. The Commission shall adopt delegated acts in accordance with Article 301a specifying the information referred to in paragraphs 1 to 4 of this Article and criteria for limited supervisory reporting for captive insurance undertakings and reinsurance captive undertakings considering the nature, scale and complexity of the risks of these specific types of undertakings with a view to ensuring, to the appropriate extent, convergence of supervisory reporting.’;

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 1 – subparagaph 1 – introductory part: The determination of the relevant risk-free interest rate term structure referred to in Article 77(2) shall make use of, and be consistent with, information derived from relevant financial instruments. That determination shall take into account relevant financial instruments of those maturities where the markets for those financial instruments are deep, liquid and transparent. As of the first maturity (the ‘first smoothing point’) where markets for those financial instruments are not deep, liquid or transparent, the relevant risk-free interest rate shall be extrapolated in accordance with paragraph 2. The first smoothing point for a currency shall be the longest maturity for which all of the following conditions are met:

Added(e) in paragraph 10, the first subparagraph is replaced by the following:

RemovedDirective 2009/138/EC

Added‘In order to ensure uniform conditions of application of this Article, EIOPA shall develop draft implementing technical standards on regular supervisory reporting with regard to the templates for the submission of information to the supervisory authorities referred to in paragraphs 1 and 2, including the risk-based thresholds establishing the trigger for reporting requirements when applicable or any exemption of specific information for certain types of undertakings such as captive insurance and reinsurance undertakings considering the nature, scale and complexity of the risks of specific types of undertakings.’;

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 1 – subparagraph 2: The extrapolated part of the relevant risk-free interest rate term structure shall be based on forward rates converging smoothly from one or a set of forward rates in relation to the longest maturities for which the bonds can be observed in a deep, liquid and transparent market to an ultimate forward rate (UFR).

Added(f) paragraph 11 is deleted;

RemovedDirective 2009/138/EC

Added(g) the following paragraph 12 is added:

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 1 – subparagraph 3: The extrapolated part of the relevant risk-free interest rates shall take into account information from financial instruments other than bonds where the markets for those financial instruments are deep liquid and transparent.

Added‘12. By [OP please insert date = 2 years after publication date], EIOPA shall submit to the Commission a report on potential measures, including legislative changes, to develop an integrated data collection to:

RemovedDirective 2009/138/EC

Added(a) reduce areas of duplications and inconsistencies between the reporting frameworks in the insurance sector and other sectors of the financial industry; ▌

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 2 – subparagraph 1: The extrapolated risk-free rate shall be determined as follows: / rFSP+h = FSP+h√((1+rFSP)FSP * exp(h*fh)) - 1 / Where: / fh = ln(1+UFR) + [(LLFR - ln(1+UFR)] * ((1-exp(-a*h)/(a*h)) / (a) UFR is the Ultimate Forward Rate / (b) a is the convergence speed parameter / (c) LLFR is the Last Liquid Forward Rate / (d) FSP is the First Smoothing Point / The convergence speed parameter a shall be set at 20 %.

Added(b) improve data standardisation and efficient sharing and use of data already reported within any Union reporting framework by any relevant competent authority, both Union and national; and

RemovedDirective 2009/138/EC

Added(ba) reduce compliance costs, in particular for low-risk profile undertakings;

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 2 – subparagraph 2: deleted

AddedEIOPA shall prioritise, but not limit itself to information concerning the areas of collective investment undertakings and derivatives reporting.

RemovedDirective 2009/138/EC

AddedWhen preparing the report referred to in the first subparagraph, EIOPA shall work in close cooperation with the other European Supervisory Authorities and the European Central Bank and shall, where relevant, involve the national competent authorities.’;

RemovedArticle 1 – paragraph 1 – point 37, Article 77a – paragraph 2a (new): 2 a. Notwithstanding paragraph 1, the starting point for the extrapolation of risk-free interest rates, in particular for the euro, should be at a maturity of 20 years. In addition, the extrapolated part of the risk-free interest rate term structure for the euro shall converge in such a way to the ultimate forward rate that for maturities 40 years past the starting point of the extrapolation, the extrapolated forward rates do not differ by more than three basis points from the ultimate forward rate. For currencies other than the euro, the characteristics of the local bond and swap markets shall be taken into account when determining the starting point for the extrapolation of risk-free interest rates and the appropriate convergence period to the ultimate forward rate.

Added(17) the following Article 35a is inserted:

RemovedBased on recital 30 of current Omnibus II Directive.

Added‘Article 35a Exemptions and limitations to quantitative regular supervisory reporting granted by supervisory authorities

RemovedDirective 2009/138/EC

Added‘1. Without prejudice to Article 129(4), where the predefined periods referred to in Article 35(2), point (a)(i) are shorter than one year the supervisory authorities concerned may limit regular supervisory reporting, where:

RemovedArticle 1 – paragraph 1 – point 37 a (new), Article 77b – paragraph 1: (37a) paragraph 1 of Article 77b is amended as follows: / (a) point (b) is deleted / (b) point (i) is replaced by the following: / (i) the insurance or reinsurance obligations of an insurance or reinsurance contract, and where a group contract is considered a single contract, are not split into different parts when composing the portfolio of insurance or reinsurance obligations for the purpose of this paragraph.

Added(a) the submission of that information would be overly burdensome in relation to the nature, scale and complexity of the risks inherent in the business of the undertaking;

RemovedDirective 2009/138/EC

Added(b) the information is reported at least annually.

RemovedArticle 1 – paragraph 1 – point 38 – point c, Article 77d – paragraph 2 – subparagraphs 2 a (new) and 2 b (new): For each currency and each country, the spread referred to in paragraph (2) shall be equal to the following: / S = wgov * max (Sgov, 0) + wcorp * max(Scorp, 0) / where: / (a) wgov denotes the ratio of the value of government bonds included in the reference portfolio of assets for that currency or country and the value of all the assets included int hat reference portfolio; / (b) Sgov denotes the average currency spread on government bonds included in the reference portfolio of assets for that currency or country; / (c) wcorp denotes the ratio of the value of bonds other than government bonds, loans and securitisations included in the reference portfolio of assets for that currency or country and the value of all the assets included in that reference portfolio; / (d) Scorp denotes the average currency spread on bonds other than government bonds, loans and securitisations included in the reference portfolio of assets for that currency or country. / For the purposes of this paragraph, ‘government bonds’ means exposures to central governments and central banks.

AddedThat limitation to regular supervisory reporting shall be granted only to undertakings that collectively do not represent more than 20 % of a Member State’s life and non-life insurance and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions.

RemovedDirective 2009/138/EC

AddedWhen determining the eligibility of undertakings for those limitations, supervisory authorities shall give priority to low-risk profile undertakings.

RemovedArticle 1 – paragraph 1 – point 38 – point c, Article 77d – paragraph 3 – subparagraph 3a (new): The portion of the spread that is attributable to a realistic assessment of expected losses, unexpected credit risk or any other risk shall be calculated in the same manner as the fundamental spread referred to in Article 77c(2).

Added2. The supervisory authorities concerned may limit regular supervisory reporting, or exempt insurance and reinsurance undertakings from reporting on an item-by-item basis, where:

RemovedDirective 2009/138/EC

Added(a) the submission of that information would be overly burdensome in relation to the nature, scale and complexity of the risks inherent in the business of the undertaking;

RemovedArticle 1 – paragraph 1 – point 43 a (new), Article 105a: (43a) the following Article is inserted: / ‘Article 105a / Long-term equity investments / 1. A sub-set of equity investments may be treated as long-term equity investments if the insurance or reinsurance undertaking demonstrates, to the satisfaction of the supervisory authority, that all of the following conditions are met: / (a) the sub-set of equity investments as well as the holding period of each equity investment within the sub-set are clearly identified; / (b) the sub-set of equity investments is included within a portfolio of assets which is assigned to cover the best estimate of a portfolio of insurance or reinsurance obligations corresponding to one or several clearly identified businesses, and the undertaking maintains that assignment over the lifetime of the obligations; / (c) the portfolio of insurance or reinsurance obligations, and the assigned portfolio of assets referred to in point (b) are identified, managed and organised separately from the other activities of the undertaking, and the assigned portfolio of assets is not used to cover losses arising from other activities of the undertaking; / (d) the technical provisions within the portfolio of insurance or reinsurance obligations referred to in point (b) only represent a part of the total technical provisions of the insurance or reinsurance undertaking; / (e) the average holding period of equity investments in the sub-set exceeds five years, or where the average holding period of the sub-set is lower than f…

Added(b) the submission of that information is not necessary for the effective supervision of the undertaking;

RemovedDirective 2009/138/EC

Added(c) the exemption does not undermine the stability of the financial systems concerned in the Union; and

RemovedArticle 1 – paragraph 1 – point 44, Article 106 – paragraph 3: 3. The symmetric adjustment made to the standard equity capital charge covering the risk arising from changes in the level of equity prices in relation to equities not covering liabilities from unit-linked life insurance policies shall not result in an equity capital charge being applied that is more than 17 percentage points lower or 10 percentage points higher than the standard equity capital charge.;

Added(d) the undertaking is able to provide the information upon request.

RemovedDirective 2009/138/EC

Added▌

RemovedArticle 1 – paragraph 1 – point 45, Article 109 – paragraph 1 – subparagraph 1: Notwithstanding the first subparagraph, low-risk profile undertakings may use a simplified calculation for a specific sub-module or risk module.

AddedThe exemption from reporting on an item-by-item basis shall be granted only to undertakings that collectively do not represent more than 20 % of a Member State’s life and non-life insurance or reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions. When determining the eligibility of undertakings for those limitations or exemptions, supervisory authorities shall give priority to low-risk profile undertakings.

RemovedDirective 2009/138/EC

Added3. Captive insurance undertakings and captive reinsurance undertakings shall be exempted from regular supervisory reporting on an item-by-item basis where the predefined periods referred to in Article 35(2), point (a)(i), are shorter than one year, provided that they comply with both of the following conditions:

RemovedArticle 1 – paragraph 1 – point 45, Article 109 – paragraph 2: 2. Where an insurance or reinsurance undertaking calculates the Solvency Capital Requirement and a risk module or sub-module does not represent a share of more than 5 % of the Basic Solvency Capital Requirement referred to in Article 103, point (a), the undertaking may use a simplified calculation for that risk module or sub-module.

Added(a) all insured persons and beneficiaries are any of the following:

RemovedThere is no reason to put a time limit on the simplifications.

Added– legal entities of the group of which the captive insurance undertaking or captive reinsurance undertaking is part,

RemovedDirective 2009/138/EC

Added– natural persons eligible to be covered under that group’s insurance policies, provided that the business covering those natural persons remains below 5% of technical provisions;

RemovedArticle 1 – paragraph 1 – point 46 – point b – introductory part, Article 111 – paragraph 1: (b) the following subparagraphs are added: