- Consultation paper released today sheds further light on SII requirements, however more clarity still needed
The European Insurance and Occupational Pensions Authority (EIOPA) today released a consultation paper encouraging insurers to contribute to the final Own Risk and Solvency Assessment (ORSA) requirements which KPMG welcomes as a positive step forward for Solvency II.
Paul Brenchley, insurance director at KPMG, commented: “At the outset, supervisors established their intention to avoid prescriptive requirements on the ORSA to ensure they were not dictating the way that insurers operate, leaving firms to decide how best to address the requirements internally. This has led to uncertainty in terms of working through what is required, however EIOPA have stuck to this principle in this publication, recognising that there is no single ORSA approach. EIOPA state that the guidelines here focus on “what is to be achieved by the ORSA rather than on how it is to be performed” so are not directive in nature.
“There is unlikely to be any further detailed guidance on the ORSA after the finalisation of this paper, so firms should treat this as the last opportunity to raise any key questions still remaining. Firms will need to work through the principles established in this paper and determine how they can be best met for their business.
“One significant step in this paper has been to provide further detail on documentation and in particular separate the ORSA reporting requirements from the Pillar 3 reporting which should be a welcome move given the uncertainty raised on ORSA reporting historically.
“The paper refers to an ORSA supervisory report which can leverage off the insurers own internal ORSA documentation on the results and conclusions regarding the ORSA. However, in line with the theme of the paper, few details are given on what is required in the ORSA supervisory report as supervisors have consciously resisted providing an example template in favour of insurers developing their own.”
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Notes to editor
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