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Preparatory phase
BaFin has commented on all EIOPA guidelines with "Yes, do comply" or "Yes, intend to comply". In addition, BaFin has divided the guidelines into 15 thematic blocks in order to structure the preparatory process and support the undertakings concerned.
Undertakings should hold intensive discussions on all guidelines and immediately take the necessary steps to implement them. Questions that arise can and should be discussed with the supervisor. BaFin will help shape the preparatory phase and proceed on a dialogue-driven and structured basis. It will inform undertakings by means of supplementary announcements on the individual thematic blocks. It will also constantly enquire about undertakings’ implementation status.
Only groups from the European Economic Area are affected. If, when applying individual guidelines, the question arises of whether third-country supervisory regimes are on a par with the Solvency II requirements, equivalence will be assumed in the preparatory phase. However, this does not imply that these third-country supervisory regimes are actually equivalent. Also in future, such decisions will be made by the European Commission or the group supervisors.
Structure of the preparatory phase
BaFin has bundled the guidelines into 15 thematic blocks in order to support undertakings affected by Solvency II during the preparatory phase. These 15 blocks follow the themes contained in the guidelines’ structure:
BaFin will publish successive announcements on each of the 15 thematic blocks over a period of 18 months. The aim will be to highlight a particular theme and provide additional information and tips. In assigning the announcements to half-yearly periods, however, BaFin does not intend to give undertakings a specific set of priorities for their preparations or to classify the individual themes.
By mid-2014, EIOPA will prepare documents that should assist undertakings with reporting and the forward-looking assessment of their own risks. EIOPA will also consider the changes that have arisen as a result of the Omnibus II Directive. The documents will relate to technical specifications on quantitative requirements, such as the Solvency Capital Requirement (SCR) and assessment of technical provisions, as well as assets and liabilities other than technical provisions. EIOPA will also provide information on the assumptions underlying the SCR calculation on the basis of the standard formula.
In an interview, Felix Hufeld, BaFin Chief Executive Director, said:
Can undertakings go their own way during preparation for Solvency II?
Yes, that is precisely what they should be doing. Undertakings have considerable leeway during the preparatory phase. We have not prioritised the individual thematic blocks for the undertakings, and staggering the phases does not imply a ranking of their importance. I would welcome it if undertakings had their own ideas about how they can successfully implement and comply with the guidelines.
In terms of legal supervisory measures, which law applies during the preparatory phase?
The requirements of the current regime will continue to apply, i.e. Solvency I. However, some of the contents of the guidelines have already been prescribed in Germany via the Insurance Supervision Act (VAG) or the Minimum Requirements for Risk Management in Insurance Undertakings (MaRisk VA). Whether or not BaFin takes legal supervisory measures will therefore depend on whether the guidelines currently apply to us. If an insurer does not make a serious effort to prepare for Solvency II — which cannot be in its interests — this could essentially be grounds for having to provide more supervisory assistance on our part. The fact is, a new supervisory framework is just around the corner. Things are now getting serious. Solvency II essentially got under way on 1 January – albeit not in one go. All of us should do our utmost so that the changeover to a more modern and improved supervisory system can succeed.
Full press release and interview