European Insurance and Occupational Pensions Authority
COVID-19 - EIOPA publishes supervisory statement on the recognition of schemes based on reinsurance under Solvency II - 21 July 2020
The European Insurance and Occupational Pensions Authority (EIOPA) has published a supervisory statement on the recognition of schemes based on reinsurance with regard to COVID-19 and credit insurance under the Solvency II Directive (2009/138/EC). The statement sets out EIOPA’s view on the treatment, for Solvency II purposes, of schemes based on reinsurance implemented by EU member states within the temporary framework for state aid measures, which were introduced to support the economy in the light of the COVID-19 pandemic.
EIOPA confirms that it has identified “several significant differences in the way in which national schemes in the area of credit insurance have been implemented” through the temporary framework. It outlines several supervisory recommendations for national competent authorities (NCAs) to ensure a level playing field, including:
- allowing insurers and reinsurers to consider schemes that transfer insurance risk to a member state’s government, based on the temporary framework, as having the same consequences as reinsurance as defined in Solvency II; those assets may be treated as linked to reinsurance for Solvency II purposes;
- allowing insurers and reinsurers to consider that schemes based on reinsurance and implemented through the government of a member state complies with relevant counterparty requirements;
- allowing insurers and reinsurers to assume that the schemes will be extended in 2021 only where such extension has already been approved; and
- stipulating that insurers and reinsurers should indicate the assumptions used in the calculation of the solvency capital requirement (SCR) in their solvency and financial condition report.
EIOPA supervisory statement on the recognition of schemes based on reinsurance under Solvency II in light of COVID-19
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Financial Conduct Authority
COVID-19 - FCA publishes update on its High Court BI insurance test case - 17, 22 and 23 July 2020
The FCA has updated its webpage on the progress of its High Court test case, which seeks a declaratory judgment about the meaning and effect of the wording of certain business interruption (BI) insurance policies.
On 17 July 2020, the FCA published several further documents to be used as part of the trial commencing on 20 July 2020. These include the Agreed List of Issues and Common Ground, which summarises what is and what is not in dispute between the parties, as well as further Agreed Facts relating to: (i) the government’s response to COVID-19; (ii) COVID-19; (iii) restrictions, guidance and advice provided to the public; (iv) notification procedures; (v) Sweden; (vi) previous pandemics; (vii) the economic impact of COVID-19; (iix) distribution channels; and (ix) the Scilly Isles.
The FCA has also published draft transcripts of the first and second days of the trial, which took place on 20 and 21 July 2020. The eight-day hearing is scheduled to end on 30 July 2020.
FCA webpage on its High Court test case on the validity of BI insurance claims in light of COVID-19
Recent Cases
Case C-427/19 Bulstrad Vienna Insurance Group AD v Olympic Insurance Company Ltd, Opinion of Advocate General Hogan, 16 July 2020
Withdrawal of authorisation – winding-up proceedings – member states’ obligation to suspend court proceedings – Solvency II Directive (2009/138/EC)
Advocate General Hogan has delivered an Opinion in relation to a request for a preliminary ruling on the interpretation of certain aspects of the reorganisation and winding-up provisions contained in Title IV (Articles 267 to 296) of the Solvency II Directive (2009/138/EC).
Advocate General Hogan responded to the issues at stake as follows:
- pursuant to Article 274, a decision of an authority of a member state to withdraw authorisation of an insurance undertaking and appoint a provisional liquidator does not constitute a ‘decision to open winding-up proceedings’ within the meaning of Solvency II, except if national legislation provides either that the provisional liquidator is entitled to realise the assets of that undertaking and to distribute the proceeds among the creditors; or the withdrawal of the authorisation automatically leads to the opening of winding-up proceedings without the need for the adoption of any further decision to that effect; and
- Articles 269(4) and Article 273(2) should be interpreted as meaning that, in a dispute between two individuals, the law of the home member state of an insurance undertaking which provides that all court proceedings against that company are to be suspended in the event of the withdrawal of its authorisation and the appointment of a provisional liquidator must not be applied by the courts of the other member states if their legislation does not contain such a rule, unless: (i) such withdrawal or such appointment constitutes either a reorganisation measure or a decision to open winding-up proceedings within the meaning of Solvency II; and (ii) the legislation of the other member states can fairly be interpreted as allowing that suspension.
Case C-427/19 Bulstrad Vienna Insurance Group AD v Olympic Insurance Company Ltd
