Update on AAE work Insurance Committee
Update on AAE work
Insurance Committee
Feedback spring meeting
Bratislava, April 2023
IRC, May 27th 2023
Daphné de Leval
EIOPA monitoring the market closely, including liquidity and banking issues emerging
EIOPA not currently deploying any regulatory tools
Noted EIOPA has same information SII 2020 review timetable
EIOPA not looking at revising SCR calibrations (there is a 5 year review in the directive) but
they are monitoring interest rates given market movements
EIOPA has some discussions with national regulators on next steps for IRRD. For now this is
not being progressed as a matter of priority
Discussed Romanian insurer Euroins (failed insurer) and the fallout from that issue
EIOPA is interested in trying to find a way to open and share data relating to sustainability
issues and risks. Getting standardised data across the EU is a challenge
EIOPA preparing a consultation paper on ICS and how this could impact internal models
under Solvency II in Europe. This might differ from approaches how ICS would impact US
and Canada (for example) and how this would compare with the impact of ICA on European
insurers
Update on EU agenda – EIOPA (1/2)
2
EIOPA looking at protection gap to understand why they exist
Right to be forgotten being worked on by Insurance Europe and noted AAE also active on
this topic
EIOPA preparing consultation paper on DORA (due June 2023 – scope first part of RTS).
Second part of consultation due by end 2023
Discussion Paper on Sustainability Risks – are these best addressed in Pillar 1 (SCR) or
Pillar 2 (ORSA), and also is historic data even relevant (how do you measure transitional risk
more generally)
Additional topics
Insurance Stress test due 2024. Already noted climate stress must be a stress to cover( Top
down approach on transition risk to assess whether the EU financial sector can afford the
transition)
Liability directive under way will include consequences for the insurance industry
Update on EU agenda – EIOPA (2/2)
3
IC responded to the following consultations:
•
EIOPA's Discussion paper on prudential treatment of sustainability risks
•
EIOPA's Discussion Paper on Methodological Principles of Insurance Stress Testing – Cyber
Component
NatCat consultation – a submission prepared, but no final submission sent to EIOPA.
However work has been useful to the non-life working group
It was noted that an ESAs consultation on sustainability had started, AAE should look
whether to prepare a submission
Consultations and responses
4
ICS and Solvency II – compare and contrast
Interest rates, and insurance guarantees and third-party guarantees
Inflation
Reinsurance and effectiveness under Standard Formula (e.g. mass lapse reinsurance)
Analysis and comparison of calibrations of Standard Formula and Internal Models to assess
appropriateness of stresses in the SCR in the current market conditions
Possible topics upcoming webinar (2023Q4)
5
Update on Solvency II (1/2)
1
6
1- Siegbert Baldauf, chair SII WG
Update on Solvency II (2/2)
1
7
1- Siegbert Baldauf, chair SII WG
Update on Sustainability (1/2)
8
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Dutch WG initiative where NGFS is taken as reference (2023Q2 expected deadline)
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Update on Sustainability (2/2)
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Updated standards of Actuarial practice (UK) & upcoming update of European Standards of Actuarial Practice for
ORSA (ESAP3) with explicit mention of sustainability and climate (members will be consulted). Gabor Hanak
mentions IAA has a similar initiative for ISAP3.
•
IAIS starting a series of 3 consultations to expand previous climate guidance. IAA is responding.
•
EIOPA is providing a staff paper on nature-related risk and insurance. Nature is likely the next key topic for the
SCrR to tackle in 2024
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•
AAE to participate to the “Climate Resilience Dialogue” of the EC
•
Presentation by the actuarial association in Switzerland
, following the publication of the final
Target Setting
Protocol
from the Net Zero Insurance Alliance.
Update on new Economic & Finance (EF) TF (1/2)
1
10
Transversal with aim to support Insurance Committee, Risk Management Committee and Pension
Committee
Chair: Samuel Achord, reporting to IRC, chair: Lauri Saraste
1- Samuel Achord, chair EF TF
Update on new Economic & Finance (EF) (2/2) TF
1
11
1- Samuel Achord, chair EF TF
From discussing regulatory tools and monitoring market issues to examining sustainability risks and upcoming consultations in the insurance industry, this update provides insights into recent developments affecting insurers. Topics include ICS and Solvency II comparisons, addressing protection gaps, and upcoming stress tests. Consultation responses and potential webinar topics are also highlighted.
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Presentation Transcript
Update on AAE work Insurance Committee Feedback spring meeting Bratislava, April 2023 IRC, May 27th 2023 Daphn de Leval
Update on EU agenda EIOPA (1/2) EIOPA monitoring the market closely, including liquidity and banking issues emerging EIOPA not currently deploying any regulatory tools Noted EIOPA has same information SII 2020 review timetable EIOPA not looking at revising SCR calibrations (there is a 5 year review in the directive) but they are monitoring interest rates given market movements EIOPA has some discussions with national regulators on next steps for IRRD. For now this is not being progressed as a matter of priority Discussed Romanian insurer Euroins (failed insurer) and the fallout from that issue EIOPA is interested in trying to find a way to open and share data relating to sustainability issues and risks. Getting standardised data across the EU is a challenge EIOPA preparing a consultation paper on ICS and how this could impact internal models under Solvency II in Europe. This might differ from approaches how ICS would impact US and Canada (for example) and how this would compare with the impact of ICA on European insurers 2
Update on EU agenda EIOPA (2/2) EIOPA looking at protection gap to understand why they exist Right to be forgotten being worked on by Insurance Europe and noted AAE also active on this topic EIOPA preparing consultation paper on DORA (due June 2023 scope first part of RTS). Second part of consultation due by end 2023 Discussion Paper on Sustainability Risks are these best addressed in Pillar 1 (SCR) or Pillar 2 (ORSA), and also is historic data even relevant (how do you measure transitional risk more generally) Additional topics Insurance Stress test due 2024. Already noted climate stress must be a stress to cover( Top down approach on transition risk to assess whether the EU financial sector can afford the transition) Liability directive under way will include consequences for the insurance industry 3
Consultations and responses IC responded to the following consultations: EIOPA's Discussion paper on prudential treatment of sustainability risks EIOPA's Discussion Paper on Methodological Principles of Insurance Stress Testing Cyber Component NatCat consultation a submission prepared, but no final submission sent to EIOPA. However work has been useful to the non-life working group It was noted that an ESAs consultation on sustainability had started, AAE should look whether to prepare a submission 4
Possible topics upcoming webinar (2023Q4) ICS and Solvency II compare and contrast Interest rates, and insurance guarantees and third-party guarantees Inflation Reinsurance and effectiveness under Standard Formula (e.g. mass lapse reinsurance) Analysis and comparison of calibrations of Standard Formula and Internal Models to assess appropriateness of stresses in the SCR in the current market conditions 5
Update on Solvency II (1/2)1 1- Siegbert Baldauf, chair SII WG 6
Update on Solvency II (2/2) 1 1- Siegbert Baldauf, chair SII WG 7
Update on Sustainability (1/2) Climate scenario - practices Dutch WG initiative where NGFS is taken as reference (2023Q2 expected deadline) Discussion on how to leverage on Dutch work at EU level Paper under development on sustainable products provide guidance Design products to make the environment more resilient to climate change Challenges on transparency, measuring the level of sustainability, avoiding greenwashing Work on a social sustainability paper has started Focus on Scope3 / customers Cross reference social topics with UN SDGs Balance the objective of giving an overview of all social aspects and the risk Wendy Walford presented on TNFD, its latest release and LEAP framework (incl. location-specific aspects and difficulty to summarize various nature-related risks in one single metric) Valeria d Amatopresented her upcoming paper on modelling reputation risk and policyholder s subjective expectations (e.g. trust gap) St phane Loisel introduces his current research work, e.g. Climate impacts on biometric aspects and Early statistical detection of trend changes 8
Update on Sustainability (2/2) Other updates by Group Chair Jer me Crugnola: Updated standards of Actuarial practice (UK) & upcoming update of European Standards of Actuarial Practice for ORSA (ESAP3) with explicit mention of sustainability and climate (members will be consulted). Gabor Hanak mentions IAA has a similar initiative for ISAP3. IAIS starting a series of 3 consultations to expand previous climate guidance. IAA is responding. EIOPA is providing a staff paper on nature-related risk and insurance. Nature is likely the next key topic for the SCrR to tackle in 2024 AOB AAE to participate to the Climate Resilience Dialogue of the EC Presentation by the actuarial association in Switzerland, following the publication of the final Target Setting Protocol from the Net Zero Insurance Alliance. 9
Update on new Economic & Finance (EF) TF (1/2) 1 Transversal with aim to support Insurance Committee, Risk Management Committee and Pension Committee Chair: Samuel Achord, reporting to IRC, chair: Lauri Saraste 10 1- Samuel Achord, chair EF TF
Update on new Economic & Finance (EF) (2/2) TF 1 11 1- Samuel Achord, chair EF TF
