Changes from report parliamentary committee draft to plenary report

Added(e) climate change, pandemics, other mass-scale events and other catastrophes, which may affect insurance and reinsurance undertakings.

RemovedContact point for the supervisor should be the insurance or reinsurance undertakings that actually hold a licence.

AddedFor the purpose of the paragraph 1, point (d), macroprudential concerns shall include, at least, plausible unfavourable future scenarios and risks related to the credit cycle and economic downturn, herding behaviour in investments or excessive exposure concentrations at the sectoral level.

RemovedDirective 2009/138/EC

Added1b. Member States shall ensure that the analysis required under paragraph 1, point (d), is commensurate to the nature of risks as well as the scale and complexity of the activities of undertakings. Member States shall ensure that insurance and reinsurance undertakings that are classified as low-risk profile undertakings, pursuant to Article 29c, and undertakings which have obtained prior supervisory approval, pursuant to Article 29d, are not obliged to conduct the analysis referred to in paragraph 1, point (e).’;

RemovedArticle 1 – paragraph 1 – point 62 – point c, Article 213 – paragraph 3b: deleted / (deleted)

Added(c) the following paragraph 2b is inserted:

RemovedThe text essentially empowers supervisors to reorganise the business structure. This is a disproportionate intrusion and should be deleted.

Added‘2b. Where the insurance or reinsurance undertaking applies the volatility adjustment referred to in Article 77d, the assessment referred to in paragraph 1 of this Article shall, in addition, include the significance with which the risk profile of the undertaking concerned deviates from the assumptions underlying the volatility adjustment.’;

RemovedDirective 2009/138/EC

Added(d) paragraph 5 is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – introductory part: 1. Groups within the meaning of Article 212 that are subject to group supervision in accordance with Article 213(2), points (a) and (b), shall be classified as low risk profile groups by their group supervisor, following the procedure set out in paragraph 2 of this Article where they meet all the following criteria at the level of the group for the consecutive two financial years prior to such classification:

Added‘5. Insurance and reinsurance undertakings shall perform the assessment referred to in paragraph 1 annually, and without any delay following any significant change in their risk profile.

RemovedDirective 2009/138/EC

AddedBy way of derogation from the first subparagraph of this paragraph, insurance undertakings may perform the assessment referred to in paragraph 1 at least every two years and without any delay following any significant change in their risk profile, unless the supervisory authority concludes based on the specific circumstances of the undertaking that a more frequent assessment is needed, where either of the following conditions is met:

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point a – point iii: deleted

Added(a) the insurance undertaking is classified as low risk profile undertaking;

RemovedDirective 2009/138/EC

Added(b) the insurance undertaking is an insurance captive undertaking or a reinsurance captive undertaking that complies with all of the following criteria:

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point b – point ii: deleted

Added(i) all insured persons and beneficiaries are legal entities of the group of which the captive insurance undertaking or captive reinsurance undertaking is part or natural persons eligible to be covered under that group’s insurance policies and the business covering natural persons eligible to be covered under the group insurance policies remains below 5% of technical provisions;

RemovedDirective 2009/138/EC

Added(ii) the insurance obligations and the insurance contracts underlying the reinsurance obligations of the captive insurance undertaking or captive reinsurance undertaking do not consist of any compulsory third-party liability insurance.

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point b – point iii: (iii) the sum of the annual gross written premiums in classes 4 to 7 and classes 14 and 15 of Section A of Annex I is not higher than 30% of total annual gross written premiums of non-life business of the group;

AddedThe exemption from the annual assessment shall not prevent the undertaking from identifying, measuring, monitoring, managing and reporting risks on a continuous basis.’;

RemovedExcludes motor insurance.

Added(e) the following paragraph 8 is added:

RemovedDirective 2009/138/EC

Added‘8. For the purpose of paragraph 1, points (d) and (e), of this Article, where authorities other than the supervisory authorities are entrusted with a macroprudential mandate, Member States shall ensure that the supervisory authorities share the findings of their macroprudential assessments of the own-risk and solvency assessment by insurance and reinsurance undertakings, as referred to in Article 45, with the relevant national authorities with a macroprudential mandate.

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point c: (c) business underwritten by insurance and reinsurance undertakings in the scope of the group which have their head offices in Member States other than the Member State of the group supervisor is not higher than 25 % of the total annual gross written premium of the group;

AddedMember States shall ensure that supervisory authorities cooperate with any national authorities with a macroprudential mandate to analyse the results and, where applicable, to identify any macroprudential concerns on how undertakings may affect macroeconomic and financial markets’ developments.

RemovedCross-border business should not be classified as riskier per se.

AddedMember States shall ensure that the supervisory authorities share any macroprudential concerns and relevant input parameters relevant for the assessment with the undertaking concerned.’;

RemovedDirective 2009/138/EC

Added(25) the following Article 45a is inserted:

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point d: (d) business underwritten by the group in Member States other than the Member State of the group supervisor is not higher than 25 % of its total annual gross written premium;

Added‘Article 45a Climate change scenario analysis

RemovedDirective 2009/138/EC

Added1. For the purposes of the identification and assessment of risks referred to in Article 45(2), the undertaking concerned shall also assess whether it has any material exposure to climate change risks. The undertaking shall demonstrate the materiality of its exposure to climate change risks in the assessment referred to in Article 45(1).

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point e: (e) investments in non-traditional investments do not represent more than 30% of total investments;

Added2. Where the undertaking concerned has material exposure to climate change risks, the undertaking shall specify at least two long-term climate change scenarios, including the following:

RemovedDirective 2009/138/EC

Added(a) a long-term climate change scenario where the global temperature increase remains below two degrees Celsius;

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point f: (f) the reinsurance business accepted of the group does not exceed 50 % of its total gross written premium income of the group.

Added(b) a long-term climate change scenario where the global temperature increase is significantly higher than two degrees Celsius.

RemovedDirective 2009/138/EC

Added3. At regular intervals, the assessment referred to in Article 45(1) shall contain an analysis of the impact on the business of the undertaking of the long-term climate change scenarios specified pursuant to paragraph 2 of this Article. Those intervals shall be proportionate to the nature, scale and complexity of the climate change risks inherent in the business of the undertaking, but be no longer than three years.

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 1 – point f a (new): (fa) the consolidated group Solvency Capital Requirement is complied with an a capital add-on in accordance with Article 232 has not been set.

Added4. The long-term climate change scenarios referred to in the paragraph 2 shall be reviewed, at least every three years, and updated where necessary. When reviewing the long-term climate change scenarios, insurance and reinsurance undertakings shall take into account the performance of tools and principles used in previous climate change scenarios, so as to enhance their effectiveness.

RemovedDirective 2009/138/EC

Added5. By way of derogation from paragraphs 2, 3 and 4, ▌ undertakings that are classified as low-risk profile undertakings shall neither be required to specify climate change scenarios nor to assess their impact on the business of the undertaking.’;

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 4: 4. Without prejudice to paragraph 1, groups which use an approved partial or full internal model to calculate their group Solvency Capital Requirement may be classified as low risk profile groups after approval from the group supervisor.

Added(26) Article 51 is amended as follows:

RemovedThe use of an internal model should not prevent classification as low-risk profile undertakings per se.

Added(a) paragraph 1 is replaced by the following:

RemovedDirective 2009/138/EC

Added‘1. Member States shall, taking into account the information required in paragraph 3 of this Article and the principles set out in Article 35(4), require insurance and reinsurance undertakings to disclose publicly, on an annual basis, a report on their solvency and financial condition.

RemovedArticle 1 – paragraph 1 – point 63, Article 213a – paragraph 5: deleted

AddedThe solvency and financial condition report shall consist of two ▌parts. The first part shall consist of information specifically addressed to policyholders and beneficiaries, and the second part shall consist of information addressed to the general public, including to other market participants. The two parts shall be disclosed ▌jointly indicating clearly that the solvency and financial condition report consists of both parts.’;

RemovedPurpose of this paragraph is unclear.