Published by Kim Durniat on
The implementing rules cover a wide range of areas including:
The implementing rules provide more detailed rules and build on the Level 1 Directive. These are Level 2 and they will make up a single prudential rulebook for all (re)insurance entities covered by Solvency II in the EU. They will in due course be supplemented by Technical Standards (level 2.5) and Guidelines (level 3). The Technical Standards will need to be adopted by the European Commission but guidelines do not as they are not legally binding.
The capital charges for high quality securitisation have been reduced. EIOPA states that a more tailored treatment of these long-term investments has the advantage of increasing the risk-sensitivity of the capital requirements and thereby promoting good risk management and supporting the prudential robustness of the overall regime. This will encourage insurers to invest in simpler securitisations that are more transparent and standardised. The aim is that this will reduce the complexity and risk involved in investing in securitisations and thereby promoting sound securitisation markets which are needed by the EU economy.
These rules as they provide firms with clarity. They form the detail of Solvency II. Firms need to consider where the new rules vary from their current understanding of the requirements and assess what they need to do before 1 January 2016 to be ready for full Solvency II implementation.