This is a comprehensive amendment to the Solvency II Directive (2009/138/EC) that introduces significant changes to the insurance regulatory framework in the EU. Here are the key aspects:The essence of the act in 3-5 sentences:
This Directive makes major updates to Solvency II rules for insurance and reinsurance companies to better reflect long-term business nature, improve risk management, enhance supervision quality and strengthen macroprudential oversight. It introduces new proportionality measures for small and non-complex insurers, updates requirements for group supervision and cross-border activities, and adds new provisions on sustainability risks and climate change. The changes aim to facilitate insurers’ contribution to long-term financing while maintaining policyholder protection.Structure and main provisions:
The Directive is structured as amendments to multiple articles of Solvency II and includes:- New criteria and process for classifying small and non-complex insurers- Updated rules on technical provisions calculation and long-term guarantee measures- Enhanced supervisory cooperation requirements for cross-border business- New macroprudential tools and powers for supervisors- Additional requirements on sustainability risks assessment- Revised group supervision framework- Changes to reporting and disclosure requirementsKey provisions for implementation:
– Introduction of proportionality measures for small insurers including simplified reporting- New requirements for climate change scenario analysis and sustainability risk management- Enhanced powers for supervisors to address liquidity and other risks- Strengthened cross-border supervision through mandatory information sharing- Updated group supervision rules including treatment of holding companies- Modified calculation methods for technical provisions and capital requirements- New disclosure requirements separating information for policyholders and market professionals
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