Solvency II Detail

Level (L) Purpose Regulatory texts Current status Relevant for: Enters into force

L1 -Framework Directive

Must be transposed into national law

Sets out the main principles of Sii; detail established in L2 and L3

Solvency II

Amended by:

Legislation

Useful for high level principles but most of the detail within L2 and L3

For NCA approval powers (eg IMAP)

By 31/3/15

Omnibus II

(corrigendum)

Legislation

For rules applicable to insurers

1/1/16

L2 – Delegated acts (DA)

Directly binding

Detailed rules based on L1 texts


Draft Delegated Acts

(non-official EIOPA reference document)

NB in the preparatory phase the Technical Specifications
(see below) should be used instead (which should for the most part mirror the DA)

Still being negotiated. To be published summer 2014

  • Definitions (Art.1bis)
  • Valuation of assets and liabilities (Art.5-11bis)
  • Data quality (Art.14-16)
  • IR structure (Art.37-40)
  • SCR standard formula (Chapter V)
  • LT approach (Art.144)
  • Govt exposures (Art.144ter)
  • Proportionality and simplifications (Art.77 – 133bis)
  • Market risk module (Art.143 – 172)
  • Definitions (Art.211 – 216)
  • Use test (Art.144ter)
  • Statistical Quality Standards (Art.217 – 225bis)
  • Calibration standards (Art.226)
  • P&L attribution (Art.228)
  • Documentation standards (Art.231 – 234)
  • External models and data (Art.235)
  • SFCR (Art.282 – 293bis)

Once published by the European Commission:

the European Parliament and the European Council have 3 months (which can be extended by a further 3 months) to review and raise objections

L2 – Implementing Technical Standards (ITS)

Directly binding

Sets out the conditions of application (processes, templates etc.) of the DA

  • concerns purely technical matters

  • Ancillary Own funds

    In consultation.Final publication scheduled for February 2015

    Information required to be submitted for the approval of an IM (IMAP Art.2)

    Includes specification for full data directory (IMAP Art.2(k))

    Conditions for approval of policy for model change (IMAP Art.3)

    20 days after publication in Official Journal


    IMAP


    Group IMAP


    MA


    SPV


    USPs

    Transparency and accountability:

    Templates and structure of the disclosures

    Consultation Dec 2014 – March 2015

    Publication expected June 2015

    QRTs

    Disclosure procedures to be followed, formats and templates

    Capital add-on: Procedures to set, calculate and remove capital add-ons

    Risk management: Procedures when assessing external credit assessments

    Rating allocation to credit quality steps

    List of regional governments and local authorities treated as exposures to the central government bonds of their jurisdiction

    Equity index for the equity dampener

    Adjustments for pegged currencies in the currency risk sub-module

    Health risk equalisation systems standard deviations

    Risk concentration: Standard forms, templates and procedures for the reporting

    Intragroup transactions: Standard forms, templates and procedures for the reporting

    Colleges:

    exchange of info (templates)

    Group SFCR:

    templates, means for disclosure

    Equity charge transitional: procedures to be followed for the application of this paragraph

    L3 – Guidelines

    Applicable on comply or explain basis

    Further guidance on specific areas of the regulation

    Valuation assets and other liabilities

    Consultation June-Sep 2014

    Publication expected Feb 2015

    IM
    guidance on [SJ1] :

    use test, exert judgment, probability distribution forecasts, methodological consistency, calibration – approximations, P&L
    attribution, validation, documentation, external models

    NCAs
    to respond within 2 months of publication

    Look-through and market risk module

    IM

    Group solvency calculation

    Governance

    ORSA

    Mechanism for determining market share based exemptions

    Dec 2014 – Mar 2015

    Publication expected July 2015

    Day 1 reporting

    Financial stability reporting

    Supervisory review process

    Harmonisation sensitivity analysis

    Extension of the recovery period

    Equivalence assessments methodology of NCAs

    L3 – Q&A tool

    Non-binding

    Clarifications on the intention or meaning of the Guidelines

    Not set-up yet for SII

    All topics covered by the Guidelines

    Once published