Proposed Changes to Solvency II Reporting

On the 25th of June 2019, EIOPA released a consultation paper on supervisory reporting and public disclosure, which covers:

  • General issues on supervisory reporting and public disclosure
  • Individual QRTs
  • SFCR and Narrative Supervisory Reporting
  • Financial Stability Reporting

The consultation paper is based on feedback from the industry via the EU Commission Public Consultation on the Fitness Check on Supervisory Reporting and EIOPA Call for Input on Solvency II Reporting and Disclosure Review 2020.

It contains the following proposals:

  • Submission deadline for annual reporting to be maintained at 16 weeks as was in place for 2018
  • Maintenance of Article 35 of Solvency II (re quarterly exemptions), complemented by a more risk-based supervisory reporting package
  • Revision and improvement of the risk-based thresholds used to apply the proportionality principle
  • Simplification of the quarterly submission
  • Deletion of some QRTs, simplification of a number of other QRTs, both quarterly and annually and the following additional amendments
    • All internal model companies to submit full standard formula templates
    • Life obligations analysis S.14.01 template is proposed to be significantly changed
    • Major revision to the S.29 Variation analysis templates
  • Creation of new templates (e.g. cyber risk), or revised templates (e.g. for cross-border business), to incorporate new information
  • Incorporation in the XBRL taxonomy and all related implementation documentation of harmonised templates to be requested by NCAs when adequate but not to be included as regular information
  • Inclusion of a short section in the SFCR with information aimed specifically at policyholders
  • Targeting the second section of the SFCR at professional readers only, following its current form, but:
    • Possibly with some information currently required for the SFCR, e.g. detailed information on system of governance, removed and required only in the RSR
    • Including more information in the SFCR, including additional QRTs and narrative information on the SCR sensitivities and own funds variations over the year
    • Requiring a more structured format of the SFCR to improve comparability, e.g. requirement for certain graphs or tables
  • Requirement for the text and the QRT’s in the SFCR to be machine-readable, in line with plans to establish a repository providing centralised access to all SFCR’s for the public

The consultation closes on 18 October.  Later in the year, EIOPA will consult on group QRTs, RSR, technical aspects of the reporting and disclosure processes, data quality and reporting and disclosure issues linked to other areas of the Solvency II 2020 Review, e.g. long-term guarantee templates.  Although there is a strong likelihood of the UK no longer coming directly under Solvency II rules in the near future, our view is that the PRA will look to maintain equivalence through continuing to apply the Solvency II rules. Therefore it is likely that any changes to Solvency II will continue to affect UK insurers.