|
|
Do you think we can expect Solvency III?
I don´t think that will be necessary. In Solvency II there are stipulated recurring revisions. In 2018, EIOPA has done one such revision of the capital requirements, addressed to the European Commission. It concerned a calibration of the requirements, since we have better risk data today. We have also considered a number of simplifications for small- and medium-sized companies. A second and more comprehensive revision is due in 2020-21. In that revision, we will look at the whole regime and among other things, review long-term liabilities.
EIOPA has the ambition to create a more consistent supervision among the member countries. How is that work progressing and is it feasible?
We don´t talk about a more harmonised supervision, but about a more consistent supervision that will lead to more convergence and enhance the quality of supervision. However, there will be always national differences. I´m happy with how supervisory convergence with Solvency II is developing in collaboration with the national supervisors. Currently, we are implementing our supervisory convergence plan. Our focus is on the implementation of different tools such internal models, the conduct of business supervision, distribution. Another priority is cross-border business, where we discovered some bad practices and we launched and are using so-called cooperation platforms to understand how the risks and provisioning should be done. Finally, we are also looking at the emerging risks such as cyber and Big Data.
In your opinion, how good is the supervision of the insurance and occupational pensions?
There are areas where the supervision does not live up to our standards. One example is the supervision of cross-border activities, which are important for the single market. However, we also need to look into new areas of risks such as cybercrime, Big Data, Fintech and Brexit. The main mandate of EIOPA is to protect consumers and to maintain financial stability within our area of competence. The first mission is the most important one and, when it comes to cross-sectoral issues, we cooperate with the two other European supervisory authorities – the European Securities and Markets Authority and the European Banking Authority.
Do you agree with Con Keating and other critics who argue that the use of a discounting rate like the Ultimate Forward Rate for valuation of long-term liabilities is counterproductive and harmful? They also argue that this valuation model killed the use of Defined Benefit plans. What do you say to these critics?
It wasn´t Ultimate Forward Rate that killed Defined Benefit plans. It was the changing economic reality. There is no free lunch. Business had to adapt to this new reality. If not, there will be too much unfairness between generations. And we have to have this discussion sooner or later to avoid intergenerational conflict. EIOPA has finalised the latest methodology of the Ultimate Forward Rate for the European Commission last year. My opinion is that Ultimate Forward Rate rests on a solid and sound method that is both, predictable and transparent for the business.
One of EIOPA’s larger projects in recent years is the creation of a framework for a Pan-European Pension Product, PEPP. What is the status of PEPP at present?
The proposal for the regulation is now being discussed in the European Parliament. In this proposal fundamental characteristics of PEPP are defined, also the role of EIOPA in authorising such products. We realised early that the harmonisation on a European scale will not be a short-term solution. Instead, we proposed a parallel European framework that member countries can introduce as a separate or additional solution. This is a courageous step and one example of how Europe can show its added value. Looking also at other areas not only pensions, I find it important for Europe to provide the European citizens with such solutions. PEPP is a good example of that.