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Responding to the European Insurance and Occupational Pension Authority's (EIOPA) consultation on the preparatory measures, insurance firms and industry bodies are urging the authority to rein in proposals that go beyond current Solvency II draft texts. They also caution against introducing measures relating to aspects of the rules where there is still a high degree of uncertainty as to their final form.
Trade body Insurance Europe says the guidelines covering systems of governance are wider than the current level 1 and level 2 texts. Unlike the high-level texts, EIOPA's proposals would apply requirements governing outsourcing contracts to activities other than those set out on the critical list of key functions.
In some cases, the trade body argues, the guidelines are also misaligned and inconsistent, such as the requirements on stress-testing, capital management policy and analysis of the effectiveness of all the risk mitigation techniques employed. Insurance Europe also says the proposed guidelines also fail to reflect the preparatory nature of the measures and should be implemented by firms on a "best efforts basis", taking into consideration their priorities and resources.
There are also concerns about how the principle of proportionality is applied in the interim measures. The German Insurance Association (GDV) says the application of the principle should depend on the level of risk involved and not only on the size or the legal form of the undertakings.
The guidelines are also overly prescriptive and take away some organisational flexibility from insurers, the association says, given the proposals' thorough description of the roles and responsibilities of the so-called key functions, such as risk management, actuarial, compliance and internal audit.
Insurers should be allowed to use their own simplifications of risk items that are immaterial to the risk assessment under the ORSA as well as to assign more than one function to the same person or organisational unit, when that is appropriate to its risk profile. This would reduce the burden of documentation and give them more organisational flexibility, the GDV says.
The reporting requirements proposed in the interim measures are also inappropriate, some argue. Insurance Europe argues insurers should not be required to report on Solvency II balance sheet items before a political agreement on the long-term guarantees package is reached, as this will define the rules for making valuations.
In addition, forcing supervisors and firms to implement elements of Solvency II that are subject to a high degree of uncertainty would be a major disincentive to firms.
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