Launch of Solvency II and its implications for (re)insurance companiesThe start of 2016 sees the launch of Solvency II by EIOPA, which will harmonize regulatory legislation across the European Union. If your head office is in the EU you will probably be required to prepare and submit a Solvency II report by May 2016. Here we guide you through the basic requirements. The overall structure of the Solvency II framework is based on three pillars.
- Pillar 1: This covers all quantitative aspects and requirements, such as measurement of assets, liabilities and capital. The main tasks are the minimum capital requirements (MCR) and solvency capital requirements (SCR).
- Pillar 2: This covers the more qualitative aspects of risk assessment. Insurers must submit assessments of risk and capital adequacy (ORSA) and also furnish details of corporate and risk governance, internal systems and controls.
- Pillar 3: This is the most important pillar as it covers all reporting requirements. Insurers must report publicly to their respective National Competent Authorities. The reports include extensive quantitative reporting requirements in the form of QRTs (Quantitative Reporting Templates).
- Regular Supervisory Report (RSR): This contains qualitative and narrative information related to the risk and governance policies of the company, and needs to be filed with the Supervisor.
- Solvency and Financial Condition Report (SFCR): This is the report that can be disclosed to the public and it must be published annually by groups and individual statutory entities.
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