COVID-19: EIOPA Statement - Mitigating impact on the EU insurance sector
On 17 March 2020, the European Insurance and Occupational Pensions Authority (EIOPA) published a statement on actions to mitigate the impact of COVID-19 on the EU insurance sector. EIOPA has been monitoring the evolving COVID-19 position in close cooperation with other European supervisory authorities and the European Systemic Risk Board.
The insurance sector will be facing both market and operational challenges.
EIOPA provides some key messages on (i) business continuity and (ii) solvency and capital position.
- Particularly important that insurers are able to maintain services to clients.
- Be ready to implement business continuity measures!
- For operational relief, supervisors to be flexible on timing of 2019 reporting/disclosures. EIOPA to coordinate specifics with supervisors.
- EIOPA to limit information requests/industry consultations in short term. Only essential requests/consultations (to assess COVID-19 impact).
- What about EIOPA's Solvency II review process? Deadline for submissions (on holistic impact) extended to 1 June 2020.
Solvency & Capital
- SCR (Solvency Capital Requirement) designed to absorb losses and maintain policyholder/beneficiary confidence.
- Recent stress tests: sector well capitalised and able to withstand "severe but plausible" shocks.
- However, insurers to preserve capital position (to be balanced with ensuring policyholder protection).
- Follow prudent dividend and other distribution policies, including for variable remuneration.
- Scope for supervisory flexibility under Solvency II highlighted (e.g. possible extension of solvency recovery periods).
- EIOPA will continue to monitor the impact of COVID-19.
- EIOPA will confirm additional details on postponement of reporting/information requirements.
- EIOPA will take (or propose to EU institutions) measures to:
- Mitigate the impact of market volatility on the insurance sector; and
- Safeguard the protection of policyholders.
For more information on this topic, please contact Sinéad Lynch, Partner, or any member of A&L Goodbody's Insurance & Reinsurance team.
Date published: 20 March 2020