EIOPA to cut reporting requirements as industry tackles COVID-19

The European Insurance and Occupational Pensions Authority (EIOPA) is to cut reporting requirements to help mitigate the impact of coronavirus/COVID-19 on the EU insurance sector.

It said it will limit its requests of information and consultations to the industry to essential elements needed to assess and monitor the impact of the current situation in the market.

EIOPA is also extending the deadline of the Holistic Impact Assessment for the 2020 Solvency II Review by two months, to 1 June 2020. In the coming days, EIOPA will communicate details on postponing additional reporting and information requirements.

It added that in order to offer operational relief in reaction to coronavirus, national competent authorities (NCAs) should be flexible regarding the timing of supervisory reporting and public disclosure regarding end 2019. EIOPA will coordinate the specifics of the approach.

EIOPA said insurers are likely to face progressively difficult conditions in the immediate future, both in terms of navigating challenging market conditions and maintaining operations while taking steps to protect employees and customers.

EIOPA emphasised the importance of business continuity. “It is particularly important that insurers are able to maintain the services to their clients,” it said. “In this sense, insurance companies should be ready to implement the necessary measures to ensure business continuity.”

EIOPA highlighted the fact that the Solvency II framework includes a ladder of supervisory intervention between the Solvency Capital Requirement and the Minimum Capital Requirement. This allows for flexibility in cases of extreme situations, including measures to extend the recovery period of affected insurers, for example, as foreseen by Article 138 of the Solvency II Directive.

“Recent stress tests have shown that the sector is well capitalised and able to withhold severe but plausible shocks to the system,” said EIOPA.

“The Solvency II framework also includes a number of tools that can be used to mitigate risks and impacts to the sector. EIOPA and the NCAs stand ready to implement these tools, if and when necessary, in a coordinated manner, to ensure that policyholders remain protected and financial stability is safeguarded.”

Nevertheless, EIOPA said insurance companies should take measures to preserve their capital position in balance with the protection of the insured, following “prudent dividend and other distribution policies, including variable remuneration.”