European Insurance and Occupational Pensions Authority
Climate change risk scenarios – EIOPA publishes opinion on supervision of use in the own risk and solvency assessment – 19 April 2021
The European Insurance and Occupational Pensions Authority (EIOPA) has published an opinion on the supervision of the use of climate change risk scenarios in the own risk and solvency assessment (ORSA) under the Solvency II Directive (2009/138/EC).
The opinion addresses national competent authorities (NCAs) and aims to enhance supervisory convergence in supervising the use of climate change risk scenarios in the ORSA, applying a risk-based and proportionate approach. EIOPA explains that the insurance and reinsurance industry will be affected by climate change-related physical and transition risks, but only a minority of insurers currently assess such risks in the ORSA.
NCAs should expect insurers to integrate climate change risks into their system of governance, risk-management systems and ORSA, in common with all risks that undertakings are or could be exposed to in line with Solvency II. Insurers are expected to identify material climate change risk exposures and subject those to a risk assessment. NCAs should also expect insurers to assess the long-term risks of climate change using scenario analysis to inform their strategic planning and business strategy, taking into account the size, nature and complexity of their climate change risk exposures. The opinion provides guidance on how to select and use climate change scenarios.
A related press release explains that EIOPA expects NCAs to collect qualitative and quantitative data to perform a supervisory review of the analysis of short and long-term climate change risks in the ORSA. Regular supervisory reporting, most notably the ORSA supervisory report, should help NCAs to collect data.
EIOPA will start monitoring the application of this opinion two years after its publication.
EIOPA Opinion on the supervision of the use of climate change risk scenarios in the own risk and solvency assessment
Press Release
Prudential Regulation Authority
Solvency II – PRA publishes supervisory disclosures – 20 April 2021
The PRA has published supervisory disclosures for year-end 2019 in line with Article 31(2) of the Solvency II Directive (2009/138/EC) (the Solvency II Directive). These disclosures include:
- aggregate statistical data on key aspects of the application of the prudential framework;
- a table covering the manner of exercise of the options provided for in the Solvency II Directive;
- links to the texts of insurance regulations that apply in the UK; and
- links to the PRA’s supervisory approach.
According to the PRA, the public disclosure is designed to encourage a uniform level of transparency and accountability between supervisory authorities. The material published is intended for PRA-authorised insurance companies.
PRA Solvency II supervisory disclosures, the PRA’s supervisory approach and insurance regulations applicable in the UK
Webpage
Financial Conduct Authority
COVID-19 – FCA publishes calculator for claims under business interruption insurance policies – 21 April 2021
The FCA has published a calculator to assist policyholders prove the presence of COVID-19 in their policy area. The results can be used to help make a claim under their business interruption (BI) insurance policy by identifying how many cases are likely to have occurred in a policy area on a particular date. The FCA has also updated its webpages on the BI insurance test case and on proving the presence of COVID-19 to highlight the existence of this calculator.
FCA business interruption insurance COVID-19 calculator
Business interruption insurance webpage
Business interruption insurance test case – proving the presence of COVID-19
