EIOPA has launched a public consultation on the future of the new proportionality framework under Solvency II.

The consultation covers two aspects, namely, the fine-tuning of the methodology for classifying insurance undertakings as small and non-complex – who would stand to benefit from proportionality measures – as well as the conditions for granting similar proportionality measures (i.e. certain reduced requirements) to insurers that do not by default fall in the small and non-complex category.

Following the recent review of the Solvency II Directive, the political agreement on the file has introduced amendments to the legislation to address concerns regarding the limited and inconsistent application of proportionality principles in the first years of Solvency II.

The revised framework around proportionality sets clear criteria for identifying small and non-complex insurers in relation to the nature, scale and complexity of their risks and empowers supervisors to grant – and withdraw – similar concessions to other non-small insurers whose risk profile nevertheless justifies the use of some proportionality measures.

EIOPA is inviting stakeholders to provide their feedback on the consultation paper and the draft advice therein by responding to the questions via the online survey no later than 25 October 2024. Responses will be published on EIOPA’s website unless otherwise requested.

This article was originally published on our sister title, Insurance Asset Management.

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