Solvency ii Association

1200 G Street NW Suite 800 Washington, DC 20005-6705 USA Tel: 202-449-9750 www.solvency-ii-association.com

Dear member, We continue to see that Solvency I I is “future rule” …

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Prepare for the Omnibus I I Directive
The Solvency I I Framework Directive (2009) on the financial position of insurance undertakings has had to be adapted in response to:

new architecture for its implementing measures introduced in the Lisbon Treaty (2009)

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new financial supervision measures introduced in Regulation 1094/2010 establishing the European I nsurance and Occupational Pensions Authority.

These changes are implemented through the “Omnibus I I directive”, currently in negotiations between Parliament and Council.

Implementing Measures
The Framework Directive is principles-based, and the detailed rules of the Solvency I I regime will be contained in Implementing Measures adopted by the Commission, and covering about 40 important areas in the Framework Directive. The Commission will propose implementing measures after Omnibus I I directive enters into force.

Technical standards and guidelines
Technical standards:
- concern purely technical matters (no strategic decisions or policy choices) - require the expertise of supervisory experts - are adopted by the Commission based on drafts submitted by the European I nsurance and Occupational Pensions Authority (EIOPA).

Regulatory Technical Standards (RTS)
These are standards for the consistent harmonisation of rules in EU legislative acts.

Implementing Technical Standards (ITS)
These are standards for the uniform application of legally binding EU acts.

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Areas to be covered, as proposed in the Omnibus I I Directive, are:
   

uniform reporting templates harmonised technical input to the standard formula harmonised procedures and templates for cooperation the exchange of information between supervisory authorities

Guidelines
The European I nsurance and Occupational Pensions Authority (EIOPA) can issue guidelines to supervisors and undertakings which is not legally binding, but companies or supervisors not complying will have to explain their reasons.

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Joint Consultation Paper on the proposed response to the European Commission‟s Call for Advice on the Fundamental Review of Financial Conglomerates Directive
14 May 2012 The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA) is launching today a three-month public consultation on the proposed response to the call for technical advice from the European Commission on the fundamental review of the Financial Conglomerates Directive (“the FICOD“). This consultation covers three broad areas where advice is sought by the European Commission: the scope of application, the group wide internal governance requirements and sanctions and supervisory empowerments under the FICOD. In its proposed response, the Joint Committee issues a series of recommendations for the review of the FICOD, including the widening of the scope of supervision, addressing requirements and responsibilities to a designated entity within the financial conglomerate and the framework of supervisory powers provided by the FICOD. Moreover, the Joint Committee will be providing later this year, a supervisory contribution to the wider fundamental review of the FICOD, which is being carried out by the European Commission.

EBA, EIOPA and ESMA‟s Joint Consultation Paper on its proposed response to the European Commission‟s Call for Advice on the Fundamental Review of the Financial Conglomerates Directive London, Frankfurt, Paris, 14 May 2012
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1. Responding to this Consultation
The three European Supervisory Authorities, the European Banking Authority (EBA), the European I nsurance and Occupational Pensions Authority (E IOPA) and the European Securities and Markets Authority (ESMA) invite comments on all matters in this. Comments are most helpful if they:

-

Respond to the question stated; Indicate the specific question to which the comment relates; Contain a clear rationale; Provide evidence to support the views expressed/ rationale proposed; and - Describe any alternative regulatory choices EBA/EIOPA/ESMA should consider.

2. Executive Summary
1. The Joint Committee of the European Supervisory Authorities‟ Sub Committee on Financial Conglomerates (JCFC) received a Call for Advice from the European Commission in April 2011 to look at the (A)Scope of application, especially the inclusion of nonregulated entities (B) Internal governance requirements and sanctions, and (C)Supervisory empowerment of Directive 2002/87/ EC on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate (FICOD). This advice shall contribute to the European Commission‟s fundamental review of the FICOD, following the short technical review, resulting in Directive 2011/ 89/ EU (hereafter FICOD12). 2. As a result of its analysis, the EBA, E IOPA and ESMA, hereinafter the ESAs, propose the following answers to the questions risen by the
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Commission in its fourth Call for Advice (hereinafter CfA): Question 1 CfA: What should be the perimeter of supervision, when a financial conglomerate is supervised on a group wide basis?

3. Recommendation 1:
The Perimeter of supervision should be enlarged to ensure a more thorough group wide supervision and avoid possible regulatory arbitrage, by enhancing the groups of entities that can be included in the identification of a financial conglomerate. Accordingly the ESAs suggest to allow for a more consistent and broader identification of financial conglomerates to modify the definition of “financial sector” [according to Article 2 (8) FICOD] and/ or the definition of “regulated entities” [according to Article 2 (4) FICOD]. Therefore, the definition of financial sector [Article 2 (8) FICOD] should be enlarged to include insurance ancillary services undertakings and all special purpose vehicles/entities to enable a broader identification of financial conglomerates, and to enable that the risks are appropriately captured. 4. The ESAs have assessed whether Institutions for occupational retirement provision (IORPs) should be included as part of a financial conglomerate and are mindful of the national specificities of IORPs. The ESAs welcome the views of the stakeholders on the following options:

Option 1:
Include I ORPs within the definition of “financial sector”, in a similar manner to the inclusion of Alternative I nvestment Fund Managers (AIFM) and Asset Management Companies (AMC) within FICOD, e.g. by enlarging the definition of a regulated entity according to Article 2 (4) FICOD and by amending Article 3 FICOD respectively.
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Option 2:
Maintain the status quo; such that I ORPs would not be included within group wide supervision at cross5sectoral level, given that prudential risks posed by I ORPs to financial conglomerates have not been demonstrated. However, this might imply that relevant financial activities of IORPs might not be taken into account when identifying a financial conglomerate and applying supplementary supervision.

5. Recommendation 2:
Mixed financial holding companies (MFHCs), even if unregulated, should be made subject to supplementary supervision or any type of requirements that are proposed below. Accordingly, MFHCs should be included together with regulated entities as the legal addressee of supplementary supervision.

6. Recommendation 3:
Companies undertaking solely industrial activities (with no financial services activity at all), such as industrial conglomerates, should not be subject to direct financial supervision as the supervisory focus might be diverted from financial undertakings. Mixed activity holding companies (MAHCs) and mixed activity insurance holding companies (MAIHCs) should not become direct addressees of FICOD, but the supervisor should have the ability to access relevant information from such MAHC and MAIHC within its supervisory tool kit. The following supervisory tools are not mutually exclusive and the ESAs welcome the views of the stakeholders in order to assess the implication of this recommendation further. 7. Supervisors should be empowered:
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Tool 1 –
To require the creation of an intermediate financial holding which is responsible for all the entities (or at least, all the regulated entities) carrying out financial activities subject to supplementary supervision and which will be the “addressee” for supervision.

Tool 2 –
To designate one single “point of entry” at the top of the unregulated entities in place of a formal „common chapeau‟ of the financial entities in the group. This point of entry is not a legal person, but a simple reference for the supervisors (e.g. a specific team or division or a member of the Board of the parent entity).

Tool 3 –
To designate a specified regulated entity as point of entry which does not necessarily need to be the top entity of the entire financial conglomerate. This option has merit if the enforcement requirements and sanctioning measures addressed to the top entity cannot be adequately enforced by the supervisors. Question 2 CfA: Given your experience and expertise, which legal entity in a conglomerate should be responsible and qualify for compliance with group wide requirements, i.e. which legal entity should be the responsible parent entity?

8. Recommendation 4:
The European Commission should identify and define an ultimate responsible entity for the financial conglomerate according to the following minimum criteria: control, the dominant entity from the
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market‟s perspective (market listed entity) and the ability to fulfil specific duties towards its subsidiaries and its supervisor. Question 3 CfA: Given your supervisory experience and expertise, which requirements should be imposed on this qualified parent entity in the context of group wide supervision?

9. Recommendation 5:
This ultimate responsible entity should be responsible for compliance with group wide requirements. The European Commission should explicitly require the ultimate responsible entity to have a coordinating and directing role over the other entities of the conglomerate.

Moreover, some existing requirements for regulated entities and requirements that can be derived from the ESAs‟ guidelines on I nternal Controls should also be applicable for the top parent entity, whether the regulated entity is a Holding Company or a Financial H olding Company (FHC), I nsurance H olding Company (IH C) or a MFHC.
Question 4 CfA6: Given your supervisory experience and expertise, which incentives (special benefits or sanctions) would make the enforcement of the group wide requirements more credible?

10. Recommendation 6:
In order to ensure that the group wide requirements are enforceable, the European Commission should develop an enforcement regime towards the ultimate responsible entity and its subsidiaries. This would imply a dual approach with enforcement powers towards the top entity for group wide risks and towards the individual entities for their respective responsibilities.

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Corrective measures should be directed towards the entity that is responsible for the respective breach.

11.Recommendation 7:
In any case, the supervisor should have a minimum set of measures, consisting of informative and investigative measures, at hand (see Recommendation 3). Supervisors should be able to administer sanction measures addressed at the MAHC or MAIHC, where this entity does not to provide the requested information. Moreover, when (under Tool 1, Recommendation 3) an intermediate financial holding company has been established, supervisors should be able to administer sanction measures at this intermediate financial holding company. Question 5 CfA: When reflecting upon this advice, would supervisors in Europe need other or additional empowerment in their jurisdictions?

12. Recommendation 8:
Whilst the FICOD provides the ESAs and the supervisors with a large supervisory tool kit, supervisor‟s actual use of this tool kit should be enhanced. Further a minimum set of enforcement measures that national supervisors should have at their disposal towards the group (Article 16 FICOD), should be achieved by the ESAs developing guidelines or by being asked to develop binding technical standards for a common reporting scheme on risk concentrations and intra group transactions, (including the possible development of guidelines for quantitative limits under Article 7 (3) and 8 (3) FICOD).

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This also implies creating a minimum set of sanctioning measures that should be applied towards the group in case of a breach of group wide requirements. In addition, the European Commission should take into account sectoral differences that may arise between CRD IV and Solvency I I .

Structures of a financial conglomerate
The following example illustrates that there are some group structures that make it very difficult to identify a financial conglomerate: In some cases a subgroup within a large complex group (hereafter LCG) qualifies as a financial conglomerate. But after calculating the threshold for the entire group (including the “real” industry) this group does not fulfil the FICOD‟s 40% threshold and, therefore, the whole group will not be subject to supplementary supervision.

This situation may also be a way of avoiding supplementary supervision.

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By setting up a chain of holding companies with subsidiaries of “real” industry the 40%5threshold will not be fulfilled after a certain point. Currently, the supervisor is only allowed to address the regulated entity (e.g. in order to get information). The regulated entity has to cooperate with its parent entity (and is responsible for the delivered information to the supervisor) but has (under company law) no powers to get necessary information. Therefore the possibility to address supervisory issues concerning information and sanctions to holding companies should be strengthened. In addition, there might be structures which are even more complex. In these cases industrial groups may have many different regulated entities which are not held by one parent entity but are spread over the group.

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In this case, it is almost impossible for supervisors to identify the holding company which may qualify as MAHC or MAIHC. Further, supervisors might not be able to supervise the group on a groupwide level to avoid double gearing; but the regulated entities of the banking and insurance sector are all supervised on a solo level. The potential negative effects (arising from intragroup transactions or risk concentrations) are scarcely visible. This may lead to spillover effects (either from the industrial part to the financial part or vice versa).

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Consequently, supplementary supervision on a group wide level would help (if this group does not qualify as a financial conglomerate according to Article 3 FICOD). Thus, introducing a responsible entity within the group as an addressee for supervisory actions would lead to more clarity from a supervisory point of view.

To learn more:
http:/ / www.eba.europa.eu/ cebs/media/ Publications/ Consultation%20 Papers/2012/JC%2001/JC-CP-2012-01--ESAs-Joint-CP----EC-call-foradvice-on-fundamental-FICOD-review-.pdf

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The fit and proper requirements…

Tribunal upholds FSA decision to ban and fine former UBS advisers £1.3m for not being fit and proper in relation to an unauthorised trading scheme
21 May 2012 The Upper Tribunal (Tax and Chancery Chamber) has directed the Financial Services Authority (FSA) to fine Sachin Karpe £1.25 million and Laila Karan £ 75,000 and ban them both from performing any role in regulated financial services for failing to act with integrity, in breach of Principle 1 of the FSA‟s Statements of Principles and Code of Conduct for Approved Persons (“APER”) and for not being fit and proper persons. Between January 2006 to January 2008, Karpe was Desk Head of the Asia I I Desk at UBS AG (UBS) international wealth management business in London.

Between February 2007 and January 2008, Karan worked as a Client Advisor on the Asia I I Desk, reporting directly to Karpe.
The Asia I I Desk provided services to customers resident in I ndia, or of Indian origin.

Karpe
During the relevant period Karpe carried out substantial unauthorised trading, predominantly in FX instruments, with a gross value of billions of pounds across 39 customer accounts. He also made unauthorised transfers and loans between client accounts in order to conceal losses arising from the unauthorised trading.
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He directed others (including Karan) to assist him in arranging the transfers and loans, and creating false documentation for the unauthorised trading. His scheme resulted in substantial losses for 21 customers. UBS has since paid compensation to the affected customers in excess of US$42 million.

Karpe also established an investment structure to enable a major (Indian resident) customer (via an investment fund incorporated in Mauritius) to breach I ndian law in clear contravention of UBS guidelines.
Ultimately, the customer invested over US$250 million in the fund. Karpe deliberately and repeatedly misled compliance in order to accommodate his customer. Karpe also misled UBS and senior management about paying compensation to a customer using monies from another customer account. The Tribunal found that: “Mr Karpe induced others serving on his desk to participate in what was an obviously dishonest course of conduct...we infer that the whole motivation was to benefit him indirectly and in the long term by obtaining new clients through his apparent prestige, increasing funds under management and thereby advancing his career and increasing his bonuses.” The Tribunal accepted that the compliance failings at UBS might have created an environment within which staff could “get away with” misconduct – however, this was no excuse for Karpe‟s sustained dishonesty.

Karan
Karan did not instigate the unauthorised trading; however, she was aware that unauthorised activity was occurring on some customer accounts for which she was responsible.
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Between February 2007 and January 2008, rather than escalating this knowledge, Karan assisted Karpe in concealing the unauthorised activity. In particular, Karan prepared false, handwritten telephone attendance notes purporting to record customer instructions she had received when she had taken no such instructions; routed transactions through a suspense account in order to conceal their origin and destination; signed a number of UBS documents recording the approval of transactions on the accounts without having received instructions or authorisation from the customers; and failed to escalate her knowledge of unauthorised loans between customers. Ms Karan also failed to escalate her knowledge that Mr Karpe had misled UBS and senior management about paying compensation to a customer using monies from another customer account. The Tribunal noted that: “We recognise that Ms Karan had been placed in an extremely awkward situation through the manipulation of Mr Karpe.

The fact, however, is that over and over again she chose to go along with and, on occasions, to facilitate Mr Karpe‟s wrongdoing.”
Tracey McDermott, acting director of enforcement and financial crime, said: “Karpe exploited and abused his position of trust, and persuaded more junior employees to engage in misconduct to assist him. Such behaviour is in breach of his obligations to his employer, his clients and his colleagues as well as to the regulator.

It has no place in the financial services industry.
We welcome the Tribunal‟s confirmation that as well as banning Karpe, a significant financial penalty should also be imposed. This sends a clear message of the consequences of such behaviour.

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“Karan sought to categorise herself as a victim in this matter. The Tribunal (as had the FSA) recognised that she did not initiate the misconduct, and was placed in a difficult position by Karpe. However, the findings and the resulting sanctions send a clear message that an approved person must take responsibility for their own actions. Where an approved person is aware that colleagues are engaging in misconduct, we expect them to blow the whistle, not to become involved themselves. “Those who take on the responsibility of being an approved person should be in no doubt about our commitment to take the strongest action to tackle behaviour which falls below the high standards we expect.” In November 2009 the FSA fined UBS £8million for systems and controls failures in relation to the unauthorised activity which occurred on the Asia I I Desk.

In December 2011 Jaspreet Singh Ahuja and in November 2009 Andrew Cumming, both former Asia I I Desk client advisers, were banned and fined £ 150,000 and £35,000 respectively.

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Gabriel Bernardino, Chairman of E IOPA

EIOPA, Solvency I I and the Loss Adjusting Profession
General Assembly of the European Federation of Loss Adjusting Experts Ladies and Gentlemen, It is a privilege and pleasure to be here at the General Assembly of the European Federation of Loss Adjusting Experts. I would like to start with a thank you to the organizers and to the President of FUEDI Mr. Rui de Almeida for inviting me to participate in this event. In my presentation today, I will touch on three main issues: I.What is EIOPA, the European I nsurance and Occupational Pensions Authority for whom I have the privilege to serve as chairman;

II.How Solvency I I can contribute to the improvement of risk management;
III.The loss adjusting profession, its relevance for the insurance market and the overall society.

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What is EIOPA?
EIOPA is the European supervisory authority for the insurance and occupational pensions sectors. We are a young organisation: in January, we completed our first year as a European agency, one of the three European Supervisory Authorities in the financial system. We are an independent Union body with legal personality, accountable to the European Parliament and the Council. We clearly see our mission, tasks and responsibilities. We see EIO PA‟s mission in protecting public interest by contributing to the short, medium and long term stability and effectiveness of the financial system, for the EU citizens and economy. This mission is pursued by promoting a sound regulatory framework and consistent supervisory practices in order to protect the rights of policyholders, pension scheme members and beneficiaries and contribute to the public confidence in the European Union‟s insurance and occupational pensions sectors. This is a very important mission if we realize the relevance of insurance and occupational pensions in the daily life of citizens and on the development of the economy. The objectives of the new European supervisory authorities, and particularly of E IOPA, are extremely relevant: - Contribute to a stable and effective financial system; - Promote sound regulation and supervision; - Enhance customer protection;
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- Ensure the transparent, efficient and orderly functioning of the markets; - Contribute to international supervisory coordination; - Avoid regulatory arbitrage; - Ensure equal conditions of competition; and -Implement appropriate regulation and supervision of risks. In order to fulfil these objectives, E IOPA has important powers. We develop technical standards that become binding for all insurance undertakings in the EU and issue guidelines and recommendations that national supervisors apply on a “comply or explain” basis. We settle disagreements between national supervisory authorities in crossborder situations and have a coordinating role in crisis situations. EIOPA monitors the correct application of the EU law in the different Member States, by using, if necessary, its powers of investigation in local markets. EIOPA and national supervisors are independent from one another, but closely cooperate with one another.

EIOPA does not substitute local authorities.
It has its own powers and responsibilities, but day to day supervision remains a task of the national authorities. The key decision organ of E IOPA is the Board of Supervisors, where the heads of the national supervisory authorities are represented.

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However, it is very important to mention that the EIOPA Regulation provides that members of the Board of Supervisors must act with independence and within the sole interest of the European Union. Most of our decisions are taken by simple majority, some by qualified majority. EIOPA wants to represent an added value to European consumers and to the European supervisory landscape. In order to fulfil its mandate, EIOPA is building up its own resources and exploiting the knowledge and experience of its Members. This is a very important element. We want to create a truly European supervisory culture. A culture based on best and robust practices.

In order to create this culture, I want to bring together all the national supervisory authorities.
All of them have an important contribution to make.

EIOPA‟s regulatory tasks
EIOPA has been working on Solvency I I , advising the EU Commission on the Level 2 implementing measures. We have also been developing draft technical standards and guidelines on around 40 different areas of Solvency I I . We are doing this in a transparent way by informally consulting with key stakeholders. We plan to publicly consult as soon as the legal framework will allow us to do that.
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In order to facilitate the preparatory work of insurance undertakings for Solvency I I , we launched a number of important public consultations in areas such as the Own Risk and Solvency Assessment (ORSA) and Supervisory Reporting and Public Disclosure, including the Solvency I I XBRL Taxonomy.
We continued to work on the Solvency I I specifications for example by issuing a joint report on calibration of non life risk factors in the standard formula. EIOPA also provided input into the Commission‟s revision of the Insurance Mediation Directive (IM D) by carrying out an extensive survey of national laws providing for sanctions (both criminal and administrative) for violations of the provisions of the IM D. The Commission‟s legislative proposal (IM D2) is expected soon and I am aware that the Commission intends to capture loss adjusters under the scope of I MD2. Also, on the regulatory side, we delivered our advice to the Commission on the revision of the I ORP Directive. Stability and consumer protection were at the core of our advice. We advocate the use of a consistent and realistic measurement of all assets and liabilities and proposed the adoption of a Key I nformation Document (KID), containing the fundamental elements about performance, costs, charges and risks of defined contribution schemes. I believe that this will help to increase the confidence of consumers in this type of plans.

Oversight

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At E IOPA, we are committed and motivated to contribute to the creation of a truly European supervisory culture: a culture that promotes stability, enhances transparency and fosters consumer protection. A culture based on intelligent and effective regulation which does not stifle innovation. That is why in the area of oversight we took as a priority our participation in the colleges of supervisors, contributing to a more consistent practice. In the course of 2011, colleges of supervisors with at least one physical meeting or teleconference were organized for 69 European insurance groups. Last year, we set an annual action plan for colleges of supervisors and were monitoring its actual implementation. In February 2012, E IOPA issued the report on the functioning of colleges in 2011 and the Action Plan 2012 for colleges of supervisors. In the Action Plan, we defined clear timelines within the colleges for the setting up of an appropriate work plan to deal with the group internal model validation process.

Consumer protection and financial innovation
Consumer protection and financial innovation are priority areas for EIOPA.

We have prepared Guidelines and a Best Practices Report on Complaints Handling by Insurers.
With these Guidelines, we intend to fill an existing regulatory gap at EU level and promote convergence of regulatory practice.

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They were the subject of a public consultation at the end of last year and are due to be finalised in the second quarter of 2012. At the end of last year, E IOPA published a Report on Financial Literacy and Education I nitiatives by national competent authorities; it was a stock take of existing structures/ processes in Member States. This was in line with a requirement under our empowering legislation to review and coordinate such initiatives. We collected data on consumer trends amongst our Members authorities. This helped us to prepare an I nitial Overview, analysing and reporting on those trends. This Overview was published this year in February.

The Overview identified three key trends:
(i)Consumer protection issues around Payment Protection I nsurance (PPI) (ii) Development of unit linked life insurance and ( i i i ) I ncreased use of comparison websites by consumers. This is just the start of our ongoing monitoring of consumer trends. And finally, we focused on disclosure and selling practices of Variable Annuities. This exercise was brought about by the fact that some variable annuities products may achieve outcomes that are not easy for consumers to understand. We consulted on a draft Report at the end of last year and its final version was published this year in April.

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Finally, last year, we organized our first EIOPA Consumer Strategy Day where we had the opportunity to discuss important consumer issues with different stakeholders.

Financial stability
EIOPA was also active in the financial stability domain by assessing the resilience of the EU insurance sector to major shocks through the EU wide stress test exercise and by testing different scenarios on the low yield stress test which shows that the insurance industry would be negatively affected if a scenario were to materialize where yields remain low for a prolonged period of time. EIOPA also issues, on a bi-annual basis, Financial Stability Reports. One of the conclusions we made in our December publication is that “due to significant natural catastrophes during the examined period, reinsurers suffered above average losses.

Furthermore, life insurers may be subject to the risk of having insufficient liquidity , which can be emphasised by banking-related transactions, e.g. through “liquidity swaps” and similar products as well as due to increasing surrenders”.
Furthermore, EIOPA is contributing to macro-prudential discussions and risk analysis in the context of the European Systemic Risk Board, supported by the establishment of the EIOPA Risk Dashboard.

International relations
EIOPA is fully aware of the importance of international relations in a globalized world. In this area, we provided final advice to the European Commission on the assessment of the Solvency I I equivalence of the Swiss, Bermudan and Japanese supervisory systems and we have started to contribute to
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the development of robust international standards by actively participating in the work of the I nternational Association of I nsurance Supervisors (IAIS). During 2011, E IOPA maintained its regulatory and supervisory dialogues with the US National Association of I nsurance Commissioners (NAIC), the China I nsurance Regulatory Commission, the Japanese Financial Services Authority and the Latin American Association of I nsurance Supervisors. EIOPA also enhanced its regular exchanges with the US Federal Insurance Office (FIO) in the context of FIO‟s responsibilities for insurance law harmonisation at US federal level and in the area of international relations.

EIOPA‟s values
I would like to say a couple of words about E IOPA‟s values.

In our daily activities and relations with our members and stakeholders, we are governed by the principles of Independence, Responsibility, Integrity, Transparency, Efficiency and Team Spirit.
We aim to be a modern, competent and professional organization that is aware of the expectations of European citizens and wants to ensure that they all are taken on board in our strategies and actions. Our goal is to act independently in an effective and efficient way towards the creation of a common European supervisory culture – and this should not be just empty words. We consider it our shared responsibility to build a sound framework for the future of insurance activities; a framework that takes into account the specificities of their business models.

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I would like to assure you that we are ambitious in fulfilling our obligations towards EU citizens and businesses and I am confident that together we will succeed.

Solvency I I
As you know, Solvency I I is the new regulatory regime for the EU insurance industry and will be implemented on 1 January 2014. Solvency I I will bring a better alignment between risk and capital, promoting good risk management practices and fostering transparency. Regulatory regimes are always a result of a balancing act between different objectives. Solvency I I will provide an appropriate basis for increased policyholder protection and will contribute to reinforce financial stability, allowing insurance companies to continue to play their natural countercyclical role in times of stressed markets. Gladly, the Solvency I I regime is increasingly being perceived as more than a “check the box” regulatory exercise that determines capital requirements. It requires the European insurance industry to critically analyze its risks, and in the process, assess the true costs attached to them. Today, I would like to talk to you particularly about risk management, which I think is of particular relevance for your profession. Now, more than ever, insurers need to rely on strong risk management capabilities in order to deal with the different challenges posed by the economic slowdown, the financial market volatility, the stress on sovereign debt, the demographic changes and the evolving pattern of natural catastrophes.

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During the last decade, not only risk management itself but also its practical application underwent a major transformation. Improvements in modelling methodology, significant development of new internal control instruments, increasing investors‟ and analysts‟ pressure as well as a new generation of risk managers with a more holistic view arriving in the company‟s also triggered change. Companies which invested, early and continuously, in establishing an effective and well integrated risk management are now taking the benefits from that strategic decision. It should not come as a surprise that insurance and reinsurance undertakings are at the forefront of applying sound and robust practices of risk management.

After all, insurance is in itself a risk management tool and thus the industry possess a wide range of specific know-how and experience in this area.
Nevertheless, from an historical perspective, risk management has not been viewed as a relevant element of the insurance regulatory regime. This has changed with Solvency I I . I believe that appropriate risk management is a cornerstone of any modern risk-based regulatory regime and consequently has its own role in the supervisory process. Solvency I I is mostly known for its risk-based capital requirement calculation. However, it is essential to recognize that one of the most important elements in this regime is the heavy reliance on robust risk management practices.

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Under the Solvency I I regime, insurance and reinsurance undertakings must have in place an effective risk management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report, on a continuous basis the risks, at an individual and at an aggregated level, to which they are or could be exposed, and their interdependencies. Importantly, risk management cannot be seen as a point in time procedure. It is a continuous process that should be used in the implementation of the undertaking‟s overall strategy and should allow an appropriate understanding of the nature and significance of the risks to which it is exposed, including its sensitivity to those risks and its ability to mitigate them. Taking into consideration some lessons learned from the financial crisis, Solvency I I identifies a number of elements which are particularly relevant for a robust implementation of a risk management system: •First of all, it is paramount to recognize the ultimate responsibility of the management body in ensuring that the implemented risk management system is suitable, effective and proportionate to the nature, scale and complexity of the risks inherent in the business. •Secondly, the risk management system needs to be documented and communicated to the relevant management and staff, to ensure it is embedded within the business. •Thirdly, an effective risk management system should cover all material risks the undertaking might be exposed to. •Finally, and significantly, the risk management system must be integrated into the organizational structure of the undertaking and its decision-making processes.

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From a supervisory perspective, the insurance undertaking‟s risk management system must be comprehensive, covering at least areas like underwriting and reserving, asset–liability management, investment, liquidity and concentrations, operational risk and reinsurance and other risk mitigation techniques. In each of these areas, supervisors have been transparent in their expectations towards undertakings. Let me touch particularly on the area of underwriting and reserving. Underwriting risk is at the centre of the insurance business. The risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and reserving assumptions is clearly related to the quality of the information available and its management. Consequently, supervisors expect that suitable processes and procedures will be in place to ensure the reliability, sufficiency and adequacy of both the statistical and accounting data to be considered both in the underwriting and reserving processes. As part of the system of governance, insurance undertakings should be required to employ personnel with the skills, knowledge and expertise necessary to discharge the responsibilities allocated to them properly. Furthermore, insurance undertakings should ensure that effective systems are in place to prevent conflicts of interest and that potential sources of conflicts of interest are identified and procedures are established in order to ensure that those involved with the implementation of the undertaking‟s strategies and policies understand where conflicts of interest could arise and how such conflicts are to be addressed. Furthermore, the undertaking should ensure that all policies and procedures established for underwriting are applied by all distribution channels of the undertaking insofar as they are relevant for them and
Solvency ii Association www.solvency-ii-association.com

that they have in place adequate claims management procedures which should cover the overall cycle of claims: receipt, assessment, processing and settlement, complaints and dispute settlement and reinsurance recoverables. I believe that the practical implementation of these requirements is of fundamental relevance for the loss adjusting profession.

The Loss Adjusting profession
The profession of loss adjuster is crucial for the insurance business and for the society. The services provided by loss adjusters to insurers and other customers should be based on professionalism, independence and impartial and accurate assessment of claims. These are indeed the key words of your federation. Your role is particularly sensitive in the relationship between insurers and their clients and claimants.

You have a particularly relevant role when dealing with major catastrophes.
I am aware that, during the years of its existence, FUEDI made a lot of efforts in maintaining high standards of professional conduct and competence, high educational standards as well as unified standards of customer services. I believe that these efforts represent a priceless contribution to the fully integrated and reliable insurance market of the European Union and to the overall reinforcement of consumer protection. I am sure that, in the near future, the loss adjusting profession will be further recognized at the EU level.
Solvency ii Association www.solvency-ii-association.com

In my opinion, it is fundamental to assure that all loss adjusters working in the EU follow strict rules of professional conduct including maintaining qualities of integrity and impartiality and are bound by sound loss adjusting practices. It is also my belief that proper self-regulation is an important tool in this area, but nevertheless, some basic principles should be incorporated in the EU regulatory framework. I am looking forward to work in close cooperation with your profession and with the insurance industry to ensure increased confidence for policyholders and beneficiaries in the insurance sector. Thank you.

Solvency ii Association www.solvency-ii-association.com

Speech Gabriel Bernardino, Chairman of E IOPA

EIOPA, Solvency I I and the Loss Adjusting Profession
General Assembly of the European Federation of Loss Adjusting Experts Porto, 1 1 May 2012

Important parts
I will touch on three main issues: I.What is EIOPA, the European I nsurance and Occupational Pensions Authority for whom I have the privilege to serve as chairman; I I . H ow Solvency I I can contribute to the improvement of risk management; III.The loss adjusting profession, its relevance for the insurance market and the overall society.

What is EIOPA?
EIOPA is the European supervisory authority for the insurance and occupational pensions sectors.
We are a young organisation: in January, we completed our first year as a European agency, one of the three European Supervisory Authorities in the financial system. We are an independent Union body with legal personality, accountable to the European Parliament and the Council.

Solvency ii Association www.solvency-ii-association.com

We clearly see our mission, tasks and responsibilities. We see E IOPA‟s mission in protecting public interest by contributing to the short, medium and long term stability and effectiveness of the financial system, for the EU citizens and economy. This mission is pursued by promoting a sound regulatory framework and consistent supervisory practices in order to protect the rights of policyholders, pension scheme members and beneficiaries and contribute to the public confidence in the European Union‟s insurance and occupational pensions sectors. This is a very important mission if we realize the relevance of insurance and occupational pensions in the daily life of citizens and on the development of the economy. The objectives of the new European supervisory authorities, and particularly of E IOPA, are extremely relevant:         Contribute to a stable and effective financial system; Promote sound regulation and supervision; Enhance customer protection; Ensure the transparent, efficient and orderly functioning of the markets; Contribute to international supervisory co2ordination; Avoid regulatory arbitrage; Ensure equal conditions of competition; and Implement appropriate regulation and supervision of risks.

In order to fulfil these objectives, E IOPA has important powers. We develop technical standards that become binding for all insurance undertakings in the EU and issue guidelines and recommendations that national supervisors apply on a “comply or explain” basis. We settle disagreements between national supervisory authorities in cross border situations and have a coordinating role in crisis situations.
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EIOPA monitors the correct application of the EU law in the different Member States, by using, if necessary, its powers of investigation in local markets. EIOPA and national supervisors are independent from one another, but closely cooperate with one another. EIOPA does not substitute local authorities. It has its own powers and responsibilities, but day to day supervision remains a task of the national authorities. The key decision organ of E IOPA is the Board of Supervisors, where the heads of the national supervisory authorities are represented. However, it is very important to mention that the EIOPA Regulation provides that members of the Board of Supervisors must act with independence and within the sole interest of the European Union. Most of our decisions are taken by simple majority, some by qualified majority. EIOPA wants to represent an added value to European consumers and to the European supervisory landscape. In order to fulfil its mandate, EIOPA is building up its own resources and exploiting the knowledge and experience of its Members. This is a very important element. We want to create a truly European supervisory culture. A culture based on best and robust practices. In order to create this culture, I want to bring together all the national supervisory authorities. All of them have an important contribution to make.

Solvency ii Association www.solvency-ii-association.com

EIOPA‟s regulatory tasks
EIOPA has been working on Solvency I I , advising the EU Commission on the Level 2 implementing measures. We have also been developing draft technical standards and guidelines on around 40 different areas of Solvency I I . We are doing this in a transparent way by informally consulting with key stakeholders. We plan to publicly consult as soon as the legal framework will allow us to do that. In order to facilitate the preparatory work of insurance undertakings for Solvency I I , we launched a number of important public consultations in areas such as the Own Risk and Solvency Assessment (ORSA) and Supervisory Reporting and Public Disclosure, including the Solvency I I XBRL Taxonomy. We continued to work on the Solvency I I specifications for example by issuing a joint report on calibration of non life risk factors in the standard formula. EIOPA also provided input into the Commission‟s revision of the Insurance Mediation Directive (IM D) by carrying out an extensive survey of national laws providing for sanctions (both criminal and administrative) for violations of the provisions of the I MD. The Commission‟s legislative proposal (IM D2) is expected soon and I am aware that the Commission intends to capture loss adjusters under the scope of I MD2. Also, on the regulatory side, we delivered our advice to the Commission on the revision of the I ORP Directive. Stability and consumer protection were at the core of our advice.
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We advocate the use of a consistent and realistic measurement of all assets and liabilities and proposed the adoption of a Key I nformation Document (KID), containing the fundamental elements about performance, costs, charges and risks of defined contribution schemes. I believe that this will help to increase the confidence of consumers in this type of plans.

Oversight
At E IOPA, we are committed and motivated to contribute to the creation of a truly European supervisory culture: a culture that promotes stability, enhances transparency and fosters consumer protection. A culture based on intelligent and effective regulation which does not stifle innovation. That is why in the area of oversight we took as a priority our participation in the colleges of supervisors, contributing to a more consistent practice. In the course of 2011, colleges of supervisors with at least one physical meeting or teleconference were organized for 69 European insurance groups. Last year, we set an annual action plan for colleges of supervisors and were monitoring its actual implementation. In February 2012, E IOPA issued the report on the functioning of colleges in 2011 and the Action Plan 2012 for colleges of supervisors. In the Action Plan, we defined clear timelines within the colleges for the setting up of an appropriate work plan to deal with the group internal model validation process.

Solvency ii Association www.solvency-ii-association.com

Consumer protection and financial innovation
Consumer protection and financial innovation are priority areas for EIOPA. We have prepared Guidelines and a Best Practices Report on Complaints Handling by Insurers. With these Guidelines, we intend to fill an existing regulatory gap at EU level and promote convergence of regulatory practice. They were the subject of a public consultation at the end of last year and are due to be finalised in the second quarter of 2012. At the end of last year, E IOPA published a Report on Financial Literacy and Education I nitiatives by national competent authorities; it was a stock take of existing structures/ processes in Member States. This was in line with a requirement under our empowering legislation to review and coordinate such initiatives. We collected data on consumer trends amongst our Members authorities. This helped us to prepare an I nitial Overview, analysing and reporting on those trends. This Overview was published this year in February. The Overview identified three key trends: (i)Consumer protection issues around Payment Protection I nsurance (PPI) (ii) Development of unit linked life insurance and

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(iii) I ncreased use of comparison websites by consumers. This is just the start of our ongoing monitoring of consumer trends. And finally, we focused on disclosure and selling practices of Variable Annuities. This exercise was brought about by the fact that some variable annuities products may achieve outcomes that are not easy for consumers to understand. We consulted on a draft Report at the end of last year and its final version was published this year in April. Finally, last year, we organized our first EIOPA Consumer Strategy Day where we had the opportunity to discuss important consumer issues with different stakeholders.

Financial stability
EIOPA was also active in the financial stability domain by assessing the resilience of the EU insurance sector to major shocks through the EU wide stress test exercise and by testing different scenarios on the low yield stress test which shows that the insurance industry would be negatively affected if a scenario were to materialize where yields remain low for a prolonged period of time. EIOPA also issues, on a biannual basis, Financial Stability Reports. One of the conclusions we made in our December publication is that “due to significant natural catastrophes during the examined period, reinsurers suffered above average losses. Furthermore, life insurers may be subject to the risk of having insufficient liquidity , which can be emphasised by banking related transactions, e.g. through “liquidity swaps” and similar products as well as due to increasing surrenders”.
Solvency ii Association www.solvency-ii-association.com

Furthermore, EIOPA is contributing to macroprudential discussions and risk analysis in the context of the European Systemic Risk Board, supported by the establishment of the EIOPA Risk Dashboard.

International relations
EIOPA is fully aware of the importance of international relations in a globalized world. In this area, we provided final advice to the European Commission on the assessment of the Solvency I I equivalence of the Swiss, Bermudan and Japanese supervisory systems and we have started to contribute to the development of robust international standards by actively participating in the work of the I nternational Association of I nsurance Supervisors (IAIS). During 2011, E IOPA maintained its regulatory and supervisory dialogues with the US National Association of I nsurance Commissioners (NAIC), the China I nsurance Regulatory Commission, the Japanese Financial Services Authority and the Latin American Association of I nsurance Supervisors. EIOPA also enhanced its regular exchanges with the US Federal Insurance Office (FIO) in the context of FIO‟s responsibilities for insurance law harmonisation at US federal level and in the area of international relations.

EIOPA‟s values
I would like to say a couple of words about E IOPA‟s values. In our daily activities and relations with our members and stakeholders, we are governed by the principles of Independence, Responsibility, Integrity, Transparency, Efficiency and Team Spirit.

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We aim to be a modern, competent and professional organization that is aware of the expectations of European citizens and wants to ensure that they all are taken on board in our strategies and actions. Our goal is to act independently in an effective and efficient way towards the creation of a common European supervisory culture – and this should not be just empty words. We consider it our shared responsibility to build a sound framework for the future of insurance activities; a framework that takes into account the specificities of their business models. I would like to assure you that we are ambitious in fulfilling our obligations towards EU citizens and businesses and I am confident that together we will succeed.

Solvency I I
As you know, Solvency I I is the new regulatory regime for the EU insurance industry and will be implemented on 1 January 2014. Solvency I I will bring a better alignment between risk and capital, promoting good risk management practices and fostering transparency. Regulatory regimes are always a result of a balancing act between different objectives. Solvency I I will provide an appropriate basis for increased policyholder protection and will contribute to reinforce financial stability, allowing insurance companies to continue to play their natural countercyclical role in times of stressed markets. Gladly, the Solvency I I regime is increasingly being perceived as more than a “check the box” regulatory exercise that determines capital requirements.

Solvency ii Association www.solvency-ii-association.com

It requires the European insurance industry to critically analyze its risks, and in the process, assess the true costs attached to them. Today, I would like to talk to you particularly about risk management, which I think is of particular relevance for your profession. Now, more than ever, insurers need to rely on strong risk management capabilities in order to deal with the different challenges posed by the economic slowdown, the financial market volatility, the stress on sovereign debt, the demographic changes and the evolving pattern of natural catastrophes. During the last decade, not only risk management itself but also its practical application underwent a major transformation. Improvements in modelling methodology, significant development of new internal control instruments, increasing investors‟ and analysts‟ pressure as well as a new generation of risk managers with a more holistic view arriving in the company‟s also triggered change. Companies which invested, early and continuously, in establishing an effective and well integrated risk management are now taking the benefits from that strategic decision. It should not come as a surprise that insurance and reinsurance undertakings are at the forefront of applying sound and robust practices of risk management. After all, insurance is in itself a risk management tool and thus the industry possess a wide range of specific know how and experience in this area.

Nevertheless, from an historical perspective, risk management has not been viewed as a relevant element of the insurance regulatory regime.
This has changed with Solvency I I .
Solvency ii Association www.solvency-ii-association.com

I believe that appropriate risk management is a cornerstone of any modern risk based regulatory regime and consequently has its own role in the supervisory process. Solvency I I is mostly known for its risk based capital requirement calculation. However, it is essential to recognize that one of the most important elements in this regime is the heavy reliance on robust risk management practices. Under the Solvency I I regime, insurance and reinsurance undertakings must have in place an effective risk management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report, on a continuous basis the risks, at an individual and at an aggregated level, to which they are or could be exposed, and their interdependencies. Importantly, risk management cannot be seen as a point in time procedure. It is a continuous process that should be used in the implementation of the undertaking‟s overall strategy and should allow an appropriate understanding of the nature and significance of the risks to which it is exposed, including its sensitivity to those risks and its ability to mitigate them. Taking into consideration some lessons learned from the financial crisis, Solvency I I identifies a number of elements which are particularly relevant for a robust implementation of a risk management system: •First of all, it is paramount to recognize the ultimate responsibility of the management body in ensuring that the implemented risk management system is suitable, effective and proportionate to the nature, scale and complexity of the risks inherent in the business.

Solvency ii Association www.solvency-ii-association.com

•Secondly, the risk management system needs to be documented and communicated to the relevant management and staff, to ensure it is embedded within the business. •Thirdly, an effective risk management system should cover all material risks the undertaking might be exposed to. •Finally, and significantly, the risk management system must be integrated into the organizational structure of the undertaking and its decision making processes. From a supervisory perspective, the insurance undertaking‟s risk management system must be comprehensive, covering at least areas like underwriting and reserving, asset–liability management, investment, liquidity and concentrations, operational risk and reinsurance and other risk mitigation techniques. In each of these areas, supervisors have been transparent in their expectations towards undertakings. Let me touch particularly on the area of underwriting and reserving. Underwriting risk is at the centre of the insurance business. The risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and reserving assumptions is clearly related to the quality of the information available and its management. Consequently, supervisors expect that suitable processes and procedures will be in place to ensure the reliability, sufficiency and adequacy of both the statistical and accounting data to be considered both in the underwriting and reserving processes. As part of the system of governance, insurance undertakings should be required to employ personnel with the skills, knowledge and expertise necessary to discharge the responsibilities allocated to them properly.
Solvency ii Association www.solvency-ii-association.com

Furthermore, insurance undertakings should ensure that effective systems are in place to prevent conflicts of interest and that potential sources of conflicts of interest are identified and procedures are established in order to ensure that those involved with the implementation of the undertaking‟s strategies and policies understand where conflicts of interest could arise and how such conflicts are to be addressed. Furthermore, the undertaking should ensure that all policies and procedures established for underwriting are applied by all distribution channels of the undertaking insofar as they are relevant for them and that they have in place adequate claims management procedures which should cover the overall cycle of claims: receipt, assessment, processing and settlement, complaints and dispute settlement and reinsurance recoverables. I believe that the practical implementation of these requirements is of fundamental relevance for the loss adjusting profession.

The Loss Adjusting profession
The profession of loss adjuster is crucial for the insurance business and for the society. The services provided by loss adjusters to insurers and other customers should be based on professionalism, independence and impartial and accurate assessment of claims. These are indeed the key words of your federation. Your role is particularly sensitive in the relationship between insurers and their clients and claimants. You have a particularly relevant role when dealing with major catastrophes.

Solvency ii Association www.solvency-ii-association.com

I am aware that, during the years of its existence, FUEDI made a lot of efforts in maintaining high standards of professional conduct and competence, high educational standards as well as unified standards of customer services. I believe that these efforts represent a priceless contribution to the fully integrated and reliable insurance market of the European Union and to the overall reinforcement of consumer protection. I am sure that, in the near future, the loss adjusting profession will be further recognized at the EU level.

In my opinion, it is fundamental to assure that all loss adjusters working in the EU follow strict rules of professional conduct including maintaining qualities of integrity and impartiality and are bound by sound loss adjusting practices.
It is also my belief that proper self regulation is an important tool in this area, but nevertheless, some basic principles should be incorporated in the EU regulatory framework. I am looking forward to work in close cooperation with your profession and with the insurance industry to ensure increased confidence for policyholders and beneficiaries in the insurance sector.

Solvency ii Association www.solvency-ii-association.com

Solvency I I Speakers Bureau
The Solvency I I Association has established the Solvency I I Speakers Bureau for firms and organizations that want to access the expertise of Certified Solvency ii Professionals (CSiiPs) and Certified Solvency ii Equivalence Professionals (CSiiEPs). The Solvency I I Association will be the liaison between our certified professionals and these organizations, at no cost. We strongly believe that this can be a great opportunity for both, our certified professionals and the organizers. To learn more: www.solvency-ii-association.com/ Solvency_I I _Speakers_Bureau.html

Course Title Certified Solvency ii Professional (CSiiP): Preparing for the Solvency ii Directive of the EU (3 days)
Objectives: This course has been designed to provide with the knowledge and skills needed to understand and support compliance with the Solvency ii Directive of the European Union. Target Audience: This course is intended for decision makers, managers, professionals and consultants that: A.Work in I nsurance or Reinsurance firms of EEA countries. B.Work in Groups - Financial Conglomerates (FC), Financial H olding Companies (FHC), Mixed Financial Holding Companies (MFHC), Insurance Holding Companies (IH C) - providing insurance and/ or reinsurance services in the EEA, whose parent is located in a country of the EEA.
Solvency ii Association www.solvency-ii-association.com

C.Want to understand the challenges and the opportunities after the Solvency ii Directive. This course is highly recommended for supervisors of EEA countries that want to understand how countries see Solvency I I as a Competitive Advantage. This course is also recommended for all decision makers, managers, professionals and consultants of insurance and/ or reinsurance firms involved in risk and compliance management. About the Course INT RODUCTION  The European Union‟s Legislative Process  Directives and Regulations  The Financial Services Action Plan (FSAP) of the EU  Extraterritorial Application of European Law  Extraterritorial Application of the Solvency I I Directive  Solvency ii and the Lamfalussy Process  Level 1: Framework Principles  Level 2: Detailed Technical MeasuresLevel 3: Strengthening Cooperation Among Regulators  Level 4: Enforcement  Weaknesses of Solvency I  From Solvency I to Solvency I I  Solvency ii Players  Solvency ii Objectives THE SOLVENCY I I DIRECTIVE  A Unified Legislative Basis for Prudential Regulation of I nsurers and Reinsurers  Risk-Based Capital Allocation  Scope of the Application  Important Definitions
Solvency ii Association www.solvency-ii-association.com

            

Value-at-Risk in Solvency I I Authorisation Corporate Governance Governance Functions Risk Management Corporate Governance and Risk Management - Level 2 Fit and proper requirements for persons who effectively run the undertaking or have other key functions Internal Controls Internal Audit Actuarial Function Outsourcing Board of Directors: Role and Solvency ii Responsibilities 12 Principles – System of Governance (Level 2)

PILLAR 2  Supervisory Review Process (SRP)  Focus on Risk Management and Operational Risk  Own Risk and Solvency Assessment (ORSA)  ORSA - The I nternal Assessment Process  ORSA - The Supervisory Tool  ORSA - N ot a Third Solvency Capital Requirement  Capital add-on

PILLAR 3  Disclosure Requirements  The Solvency and Financial Condition Report (SFC)
PILLAR I  Valuation Of Assets And Liabilities Technical Provisions  The Solvency Capital Requirement (SCR)  The Value-at-Risk Measure Calibrated to a 99.5% Confidence Level over a 1-year Time Horizon
Solvency ii Association www.solvency-ii-association.com

        

The Standard Approach The I nternal Models The Collection of Additional H istorical Data External Data The Minimum Capital Requirement (MCR) Non-Compliance with the Minimum Capital Requirement Non-Compliance with the Solvency Capital Requirement Own Funds Investment Rules

INT ERNAL MODEL APPROVAL  CEIOPS Level 2 - Tests and Standards for Internal Model Approval  CEIOPS Level 2 - The procedure to be followed for the approval of an internal model  Internal Models Governance  Group internal models  Statistical quality standards  Calibration and validation standards  Documentation standards SOLVENCY I I , GROUP SUPERVISION AND TH IRD COUNTRIES  Solvency I: Solo Plus Approach  Group Supervision under Solvency I I  Rights and duties of the group supervisor  Group Solvency - Methods of calculation  Method 1 (Default method): Accounting consolidation-based method  Method 2 (Alternative method): Deduction and aggregation method  Parent Undertakings Outside the Community - Verification of Equivalence  Parent Undertakings Outside the Community - Absence of Equivalence
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 The head of the group is in the EEA and the third country regime is not equivalent  The head of the group is in the EEA and the third country regime is equivalent  The head of the group is outside the EEA and the third country is not equivalent  The head of the group is outside the EEA and the third country regime is equivalent  Small and Medium-Sized I nsurers: The Proportionality Principle  Captives and Solvency I I EQUIVALENCE WIT H SOLVENCY I I AROUND THE WORLD  Solvency ii and Countries outside the European Economic Area  The I nternational Association of I nsurance Supervisors (IAIS)  The Swiss Solvency Test (SST) and Solvency ii:  Solvency ii and the Offshore Financial Centers (OFCs)  Solvency ii and the USA  Solvency ii and the US National Association of I nsurance Commissioners (NAIC) - The Federal I nsurance Office created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in the USA, and the ORSA in the USA FROM THE REIN SURANCE DIRECTIVE TO THE SOLVENCY I I DIRECTIVE  Directive 2005/ 68/ EC of 16 November 2005 on Reinsurance - The Reinsurance Directive (RID) CLOSING  The I mpact of Solvency ii Outside the EEA  Providing I nsurance Services to the European Client  Competing with Banks  Learning from the Basel ii Framework  Regulatory Arbitrage: A Major Risk for Countries that see Compliance as an Obligation, not an Opportunity
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 Basel I I , Basel I I I, Solvency I I and Regulatory Arbitrage  Challenges and Opportunities: What is next  Regulatory Shopping after Solvency I I To learn more about the online exam you may visit: www.solvencyiiassociation.com/ CSiiP_CSiiEP_Frequently_Asked_Questions.pdf www.solvency-ii-association.com/ CSiiP_CSiiEP_Certification_Steps.pdf To learn more about the course: www.solvency-ii-association.com/ Certified_Solvency_ii_Training.htm

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