EIOPA proposals would double regulatory burden

Accountancy firm KPMG has expressed concerns over consultation papers released by the European Insurance and Occupational Pensions Authority (EIOPA) which the regular proposes should be adopted by national supervisors from January 1, 2014.

The consultation papers cover governance, a forward-looking assessment by insurers of their own risks, internal model pre-application process and submission of information to national competent authorities.

KPMG believes the measures are too detailed and burdensome for many insurers to cope with and could result in many companies doubling up on reporting requirements. Janine Hawes, insurance director at KPMG, said the proposed level of reporting is more extensive than expected.

“It is not restricted solely to narrative information, but includes a significant proportion of the quantitative reporting templates (QRT) that would apply once Solvency II comes into force. Most of the insurance industry will be affected, with EIOPA proposing that the annual templates are provided to local regulators by 80 per cent of the local insurance market and the quarterly templates by 50 per cent,” she said.

“For the UK insurance market, this could be especially burdensome, with EIOPA confirming that this interim reporting would apply in addition to any existing reporting obligations. The first submission would be the annual return for the year ended 31 December 2014, which it proposes be submitted within 20 weeks of the year-end (26 weeks for group information).  Unless the FSA removes its existing FSA Returns, this will result in UK insurers having to work on both the FSA Returns and this interim submission in parallel.

“This will represent a significant administration burden on insurance firms/groups. Given the delays to the Solvency II timetable, many companies had reduced the level of Solvency II preparation, with pillar 3 reporting deferred by many insurance groups.  These proposals will mean that they now need to reinvigorate their pillar 3 projects.”