EIOPA publishes two chapters of its Supervisory Handbook
Recently, during the summer holidays, EIOPA disclosed public versions of two previously confidential chapters of the Solvency II (SII) part of its existing Supervisory Handbook. It concerns a chapter on the supervision of climate change risks in the context of SII Pillar II requirements and a chapter on the supervision of intra-group transactions and risk concentrations, both initially adopted by EIOPA early 2022.
The two disclosed chapters form part of the three pilot project exercises aimed “to ensure that the content of the Handbook is published while preserving its intrinsic confidentiality”, thus EIOPA. It is unclear today which third chapter of the confidential part EIOPA has earmarked for transformation into a public version.
EIOPA warns in each of these public-version-chapters that certain parts have been omitted as these omitted sections contain confidential information that is “integral to the effective functioning of the supervisory review process”.
It also disclaims that the Supervisory Handbook recommends good practices and that the recommendations “should not be interpreted as legally binding nor as applicable in all cases to all undertakings and groups. When following the guidance from the handbook, NSAs are always expected to implement a risk-based approach, to use their supervisory judgment, and to take into account the specific risks and characteristics of each undertaking or group under their supervision.”
In addition to the publication on its website of these chapters, EIOPA updated the table of content of the non-confidential part of the handbook. It now includes in the SII part, besides the two mentioned chapters, also (1) its recent Supervisory Statement on the supervision of reinsurance concluded with third-country (re)insurance undertakings, (2) the Peer Review Report on the Supervision of the Prudent Person Principles under Solvency II, (3) the Peer Review Report on the proprietary assessment of Administrative, Management and Supervisory Body (AMSB) members and qualifying shareholders, including its follow-up report, and (4) the Peer Review Report on supervisory practices and application in assessing Key Functions, including its follow-up report. In the Conduct of business part of the Supervisory Handbook, it added the Peer review report on POG. And in the IORP part, it added the Peer review on supervisory practices with respect to the application of the prudent person rule for IORPs and the follow-up report. The addition of these peer review reports and their follow-up reports heralds the inclusion of a new category in the non-confidential content of the Supervisory Handbook, besides supervisory statements, opinions, supervisory assessments, etc.
While EIOPA can be applauded for disclosing a public version of two, and possibly tree chapters, of its close to twenty SII related chapters of the Supervisory Handbook, started in 2013, EIOPA has not yet concluded (based on the pilot project) that every new future chapter EIOPA develops, should be developed immediately as a public version. But it has committed to continue the re-assessment of the confidential character of its Supervisory Handbook and to increase its transparency. It has also committed to further develop its approach on public disclosure of the handbook. In the interest of predictability, especially for compliance officers, as well as accountability, may we expect these results in a not-too-distant-future?
Lieve Lowet
