New Developments in Insurance Supervision Solvency II and Insurance Distribution Directive (IDD) Steffi Illegems PhD Candidate Antwerp Liability Law and Insurance Chair Antwerp, 26 April 2018 Overview Scope and structure Types of
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New Developments in Insurance Supervision Solvency II and Insurance Distribution Directive (IDD) Steffi Illegems
PhD Candidate Antwerp Liability Law and Insurance Chair Antwerp, 26 April 2018<br>
02
Overview Scope and structure
Types of requirements
Proportionality principle
In the shadow of banking supervision
Similar objectives, yet conflicting results?
Review v. implementation
Food for thought… 2<br>
03
I. Scope and structure A. Scope 3<br>
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B. Structure 4 Lamfalussy Framework<br>
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II. Types of requirements 5 Solvency II:
Licensing of undertakings
3 pillars:
Quantitative: capital requirements, valuation, technical provisions, own funds, investments
Qualitative: governance, risk management, key functions, internal control, ORSA, outsourcing, fit & proper
Reporting to the supervisory authority, disclosure to the public
Risk-based
Proportionate to the nature, scale and complexity of the risk profile<br>
06
6 IDD:
Registration and status of intermediaries
Insurance Product Information Document (IPID)
Conflicts of interest
Advice, demands and needs
Cross-selling
Product oversight and governance (POG)
Insurance-Based Investment Products (IBIPs):
Conflicts of interest, information, suitability and appropriateness, inducements
Proportionate to the nature, scale and compexity of the risks inherent in the distributor’s business<br>
07
III. Proportionality principle 7 Great potential…
Risk profile
For requirements & supervisory actions
Not non-application, but adaptation
National specificities
But tensions and inconsistencies?
Size is (not) a criterion
Maximum harmonization
Level 1 basis<br>
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IV. In the shadow of banking supervision 8 Solvency II v. CRD IV/CRR:
3 pillars
Risk-based capital requirements
Own funds in tiers
Independent control functions/key functions (BE)
…
IDD v. MiFID II:
Key information document (IPID)
Execution only
Suitability & appropriateness
POG
…<br>
09
V. Similar objectives, yet conflicting results? 9 Conflicting results?
Life insurance products with or without guarantees/whether or not unit-linked
In a low interest rate environment<br>
10
VI. Review v. implementation 10 Solvency II:
Review stage
Delegated Regulation 2015/35 – SCR review 2018
Technical advice by EIOPA
Actual review by Commission
Solvency II Directive – Review 2021
IDD:
Implementation stage
Directive 2018/411 – Quick Fix
Transposition date: July 1st, 2018
Application date: October 1st, 2018
National transpositions + Levels 2 and 3 to be completed<br>
11
VII. Food for thought… 11 Technical aspects:
More insurance-tailored approach needed?
