Changes from report parliamentary committee draft to plenary report

Added(c) the content and level of detail of the information required from undertakings pursuant to Article 5(7), Article 10(2) and Article 12(1);

Added(d) the level of detail for the assessment of resolvability provided for in Articles 13 and 14.

Added2. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify the eligibility criteria referred to in paragraph 1.

Added3. Member States shall require the supervisory authorities or the resolution authorities, as applicable, to provide EIOPA, on an annual basis and for each Member State separately, with all of the following information:

Added(a) the number of insurance and reinsurance undertakings and groups subject to pre-emptive recovery planning and resolution planning pursuant to Articles 5, 7, 9 and 10;

Added(b) the number of insurance and reinsurance undertakings and groups benefitting from simplified obligations referred to in paragraph 1 of this Article;

Added(c) quantitative information on the application of the criteria referred to in paragraph 1;

Added(d) a description of the simplified obligations applied on the basis of the criteria referred to in paragraph 1 as compared to the full obligations, together with the volume of capital requirements, premiums, technical provisions and assets, respectively measured as percentages of the total volume of capital requirements, premiums, technical provisions and assets of the insurance and reinsurance undertakings of the Member States or of all the groups, as applicable.

Added4. EIOPA shall publicly disclose, on an annual basis and for each Member State separately, all of the following information:

Added(a) the number of insurance and reinsurance undertakings and groups subject to pre-emptive recovery planning and resolution planning pursuant to Articles 5, 7, 9 and 10;

Added(b) the number of insurance and reinsurance undertakings and groups benefitting from simplified obligations referred to in paragraph 1 of this Article;

Added(c) quantitative information on the application of the criteria referred to in paragraph 1 of this Article;

Added(d) a description of the simplified obligations applied on the basis of the eligibility criteria referred to in paragraph 1 as compared to the full obligations, together with the volume of capital requirements, premiums, technical provisions and assets, respectively measured as percentages of the total volume of capital requirements, premiums, technical provisions and assets of the insurance and reinsurance undertakings of the Member States or of all the groups, as applicable;

Added(e) and an assessment of any divergences regarding the implementation of paragraph 1 of this Article at national level.

AddedPre-emptive recovery plans

Added1. Member States shall ensure that insurance and reinsurance undertakings that are not part of a group subject to pre-emptive recovery planning pursuant to Article 7 and that meet the criteria laid down in paragraphs 2 or 3, draw up and keep updated a pre-emptive recovery plan. Such pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated. A significant deterioration in the financial position is considered to have occurred if the eligible funds fail to cover the Solvency Capital Requirement as laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC [Solvency II].

AddedThe drawing up, the keeping up-to-date and application of pre-emptive recovery plans shall be considered to be part of the system of governance within the meaning of Article 41 of Directive 2009/138/EC.

Added2. The supervisory authority shall subject insurance and reinsurance undertakings to pre-emptive recovery planning requirements on the basis of their size, business model, risk profile, interconnectedness, substitutability and, in particular, their importance for the economy of the Member States in which they operate and the significance of their cross-border activities as referred to in Title 1, Chapter 3 of Directive 2009/138/EC.

AddedSupervisory authorities shall ensure that an undertaking is subject to pre-emptive recovery planning requirements if one of the following conditions is met:

Added(a) the ratio of its gross written premiums for non-life activities or gross technical provisions for life activities vis-à-vis policy holders located in the Member State in which the undertaking is authorised over the total gross written premiums or total gross technical provisions generated by, respectively, all the non-life or life undertakings authorised in this Member State equals at least 3 %;

Added(b) the undertaking operates significant cross-border activities.

AddedNotwithstanding the previous subparagraphs, the national supervisory authority may include an undertaking if it considers the undertaking may represent particular risk. The subsidiary insurance or reinsurance undertaking of a group may be exempted by the national supervisory authority from drawing up an individual recovery plan if it is part of a group for which the ultimate parent undertaking is drawing up and maintaining a group pre-emptive recovery plan referred to in Article 7.

Added▐3. Any insurance or reinsurance undertaking which is subject to a resolution plan pursuant to Article 9 shall be subject to pre-emptive recovery planning requirements.

AddedLow risk profile undertakings, however, shall not be subject to pre-emptive recovery planning requirements on an individual basis, except where such an undertaking represents a particular risk at national or regional level.

Added▐5. Supervisory authorities shall require that insurance and reinsurance undertakings that remain at risk of experiencing a significant deterioration in their financial position update their pre-emptive recovery plans at least every two years and after a change to the legal or organisational structure of the undertaking concerned, or to its business or its financial situation, which could have a material effect on, or necessitates a material change to, the pre-emptive recovery plan.

Added6. Pre-emptive recovery plans shall not assume any access to or receipt of extraordinary public financial support.

Added7. Member States shall require that pre-emptive recovery plans contain all of the following:

Added(a) a summary of key elements of the plan, including material changes to the most recently filed plan;

Added(b) a description of the undertaking or the group;

Added(c) a framework of indicators referred to in paragraph 9;

Added(d) a description of how the pre-emptive recovery plan has been drawn-up, how it will be updated and how it will be applied;

Added(da) a summary of the material changes to the undertaking since the most recently filed recovery plan;

Added(e) a range of remedial actions;

Added(f) a communication strategy;

Added(fa) in the event that the undertaking has breached the Solvency Capital Requirement and adopted a recovery plan in accordance with Article 138 of Directive 2009/138/EC over the last 10 years, the plan as well as an assessment of the measures adopted to restore its compliance with the Solvency Capital Requirement.

Added8. Member States shall require that insurance and reinsurance undertakings as referred to in paragraph 1 assess the credibility and feasibility of pre-emptive recovery plans, in particular the framework of indicators referred to in paragraph 9 and the remedial actions, against a range of scenarios of severe macroeconomic and financial stress relevant to the insurance or reinsurance undertaking’s specific conditions, including system-wide events, idiosyncratic stress events likely to materially affect their asset and liability profile, and combinations of such stress events.

Added9. Member States shall require that insurance and reinsurance undertakings ensure that their pre-emptive recovery plans contain a framework of qualitative and quantitative indicators that identify the points at which remedial actions should be considered. Those indicators may include criteria relating to▐ capital, liabilities subject to the write-down and conversion tool, liquidity, asset quality, profitability, market conditions, macro-economic conditions and operational events. Indicators relating to the capital position shall ▐ contain any breach of the Solvency Capital Requirement laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC and the level of liabilities of the undertaking subject to the write-down and conversion tool under Article 34 and their place in the creditor hierarchy.

AddedMember States shall require that supervisory authorities ensure that insurance and reinsurance undertakings put in place appropriate arrangements for the regular monitoring of the indicators referred to in the first subparagraph.

AddedAn insurance or reinsurance undertaking as referred to in paragraph 1 that decides to take a remedial action contained in the pre-emptive recovery plan or decides to refrain from taking such remedial action although an indicator as referred to in the first subparagraph has been met, shall notify such decision to the supervisory authority without delay.

Added10. The administrative, management or supervisory body of an insurance and reinsurance undertaking as referred to in paragraph 1 shall assess and approve the pre-emptive recovery plan before submitting it to the supervisory authority for review.

Added▐12. EIOPA shall develop draft regulatory technical standards further specifying, without prejudice to Article 4, the information that an insurance or reinsurance undertaking as referred to in paragraph 1 of this Article is to include in the pre-emptive recovery plan, including the remedial actions referred to in paragraph 7, first subparagraph, point (e) of this Article and their implementation. EIOPA shall also develop draft regulatory technical standards to further specify the framework of indicators referred to in paragraph 7, first subparagraph, point (c), of this Article and, after having consulted the European Systemic Risk Board (ESRB), the range of scenarios referred to in paragraph 8 of this Article, and for the changes to the legal or organisational structure of the undertaking its business or its financial situation referred to in paragraph 5 of this Article.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedReview and assessment by supervisory authorities of pre-emptive recovery plans

Added1. Supervisory authorities shall, within six months of the submission of each pre-emptive recovery plan as referred to in Article 5 and Article 7, review that plan and assess the extent to which it satisfies the requirements laid down in Article 5 and, where applicable, Article 7, and all of the following :

Added(a) whether the implementation of the arrangements proposed in the plan is reasonably likely to maintain or restore within a specified timeframe the viability and financial position of the insurance or reinsurance undertaking or of the group;

Added(b) whether the plan and specific options within the plan are reasonably likely to be implemented within a specified timeframe and effectively in situations of financial stress;

Added(c) whether the plan and specific options within the plan are reasonably likely to avoid to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other insurance and reinsurance undertakings to implement pre-emptive recovery plans within the same period.

Added2. Supervisory authorities shall provide resolution authorities with all pre-emptive recovery plans they have received. Resolution authorities may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact the resolvability of the insurance or reinsurance undertakings concerned and make recommendations to the supervisory authority with regard to those matters.

Added3. Where an insurance or reinsurance undertaking carries out significant cross-border activities, the home supervisory authority shall, upon the request of a host supervisory authority, provide the pre-emptive recovery plan to that host supervisory authority. The host supervisory authority may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact policy holders, the real economy or the financial stability in its Member State and make recommendations to the home supervisory authority with regard to those matters. Where the home supervisory authority fails to properly take into account the recommendation from the host supervisory authority, the host supervisory authority can refer the matter to EIOPA.

Added4. Supervisory authorities that, after having assessed the pre-emptive recovery plan, conclude that there are material deficiencies in that plan, or material impediments to its implementation shall notify the insurance or reinsurance undertaking concerned, or the ultimate parent undertaking concerned, of the content of their assessment and require the undertaking concerned to submit, within two months, a revised plan demonstrating how those deficiencies or impediments are addressed. The period of two months may be extended by one month where the supervisory authority so agrees.

AddedBefore requiring an insurance or reinsurance undertaking to resubmit a pre-emptive recovery plan, the supervisory authority shall give the undertaking the opportunity to state its opinion on that requirement.

AddedA supervisory authority that finds that the deficiencies and impediments have not been adequately addressed in the revised plan may instruct the undertaking to make specific changes to the plan.

Added5. Where the insurance or reinsurance undertaking fails to submit a revised pre-emptive recovery plan, or where the supervisory authority comes to the conclusion that the revised pre-emptive recovery plan does not adequately remedy the deficiencies or potential impediments identified in its original assessment, and where it is not possible to adequately remedy the deficiencies or impediments through a direction to make specific changes to the plan, the supervisory authority shall take a reasoned decision to require the undertaking to take any measures it considers to be appropriate, taking into account the seriousness of the deficiencies and ▐impediments and the effect of the measures on the undertaking’s business.

Added▐The reasoned decision referred to in the first subparagraph shall be notified in writing to the insurance or reinsurance undertaking and shall be subject to a right of appeal.

AddedGroup pre-emptive recovery plans

Added1. Member States shall ensure that group supervisors require ultimate insurance or reinsurance parent undertakings or insurance holding companies to draw up and submit to the group supervisor a group pre-emptive recovery plan on the basis of their size, business model, risk profile, interconnectedness, substitutability and, in particular, cross-border activity. That pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated. Member States shall not require this if that parent undertaking is exempted from pre-emptive recovery planning in accordance with Article 5.

AddedGroup pre-emptive recovery plans shall consist of a pre-emptive recovery plan for the group headed by the ultimate insurance or reinsurance parent undertaking or insurance holding company. The group pre-emptive recovery plan shall identify remedial actions that may be required to be implemented at the level of that ultimate insurance or reinsurance parent undertaking or insurance holding company and individual subsidiaries.

Added2. The group pre-emptive recovery plan contain remedial actions to achieve the stabilisation of the group, or of any insurance or reinsurance undertaking of the group, when the group or any of its insurance or reinsurance undertakings is in a situation of stress so as to address or remove the causes of the distress and restore the financial position of the group or the undertaking that is part of the group in question, at the same time taking into account the financial position of other group entities.

AddedThe group pre-emptive recovery plan shall contain arrangements to ensure the coordination and consistency of proportionate measures to be taken at the level of the group and the group entities.