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Regulation should have regard to the nature, scale and complexity of the activities of the insurance undertaking concerned. This approach is particularly relevant to the regulation of small undertakings. In principle, the Framework Directive should provide the same level of protection to all policyholders. The treatment of small undertakings will be addressed further when CEIOPS answers the third wave of Calls for Advice.
CEIOPS notes that Solvency II should distinguish clearly between the role of supervisors, the role of the Board of Directors and the role of Senior Management of insurance undertakings. As a rule, supervisors should not interfere with management processes where regulation is being complied with consistently.
Complying with Pillar I requirements does not exclude the possibility of additional requirements being set under Pillar II. However, to achieve a level playing field between insurance undertakings, it will be important to put as much as is reasonably practicable in Pillar I rather than Pillar II. This will depend on how susceptible risks are to quantification and the practicability of using standardised capital requirements.
In drafting its answers, CEIOPS has incorporated as far as possible the criteria of the IAIS Insurance Core Principles and has also taken note of a number of other reports on solvency issues. Furthermore, CEIOPS has set out its general approach to transparency in its public statement of consultation practices.
At this stage, CEIOPS' advice consists of broad principles on potential implementing measures and, where appropriate, contains reference to the Framework Directive8. CEIOPS will elaborate on these principles at a later stage.