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Solvency II and XBRL Carlos Montalvo Rebuelta 19 th XBRL International Conference, Paris, 24-6-2009.

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Presentation on theme: "Solvency II and XBRL Carlos Montalvo Rebuelta 19 th XBRL International Conference, Paris, 24-6-2009."— Presentation transcript:

1 Solvency II and XBRL Carlos Montalvo Rebuelta 19 th XBRL International Conference, Paris, 24-6-2009

2 CEIOPS Outline CEIOPS: work & structure Intro to Solvency II Reporting requirements XBRL consideration

3 CEIOPS: work & structure

4 CEIOPS CEIOPS Structure Members´ Meeting Managing Board Chair: Thomas Steffen, Germany Consultative Panel W o r k i n g G r o u p s S e c r e t a r i a t Secretary General: Carlos Montalvo Insurance Groups Supervision Committee Petra Faber-Graw, Germany Internal Governance, Supervisory Review and Reporting Expert Group Gabriel Bernardino, Portugal Internal Models Expert Group Paul Sharma, United Kingdom Financial Requirements Expert Group Pauline de Chatillon, France Financial Stability Committee Kajal Vandenput, Belgium Occupational Pensions Committee Tony Hobman, United Kingdom Consumer Protection Committee Victor Rod, Luxembourg Convergence Committee Raffaele Capuano, Italy Solvency II: Review Panel Michel Flamée, Belgium

5 CEIOPS CEIOPS’ main work streams Draft CEIOPS Work Programme 2009: Insurance sector: Ongoing Solvency II workload Occupational Pensions work Supervisory culture, convergence and cooperation Financial Stability, accounting and international relations Consumer protection and market conduct 3L3 work

6 CEIOPS CEIOPS work Input Calls for Advice Meetings, deskwork, braimstormings… Consultation with stakeholders Procedures CEIOPS’ own work plan Additional mandates Results Balanced views Workable solutions example

7 Intro to Solvency II

8 CEIOPS Welcome to Solvency II...

9 CEIOPS THE SOLVENCY II PROJECT Solvency I Framework dates from the 1970s ‘Prudent’ valuation of liabilities reflect local accounting practices Relatively simplistic ‘volume- based’ capital requirements Asset risk managed by quantitative restrictions rather than capital No provision for risk review Solvency II A risk oriented approach Unified legislative basis for prudential regulation of insurers & reinsurers Non-zero failure regime Three pillar structure, based on Basel II Link to IASB work Employs Lamfalussy arrangements

10 CEIOPS A new structure for insurance supervision Insurance supervision: solo and groups Focus on firm’s responsibility Convergence of supervisory practices Convergence of supervisory reporting More pressure from rating agencies, capital markets Total balance sheet approach Market-consistent valuation (fair value) Validation of internal models Quantitative requirements Technical provisions (BE and risk margin) 2 capital requirements (MCR and SCR – SF/IM) Prudent person investment rule Own funds (3 tiers) Qualitative requirements Internal control and risk management (incl. ORSA) Supervisory review process (qualit. & quant - Add-ons) Reporting Supervisory reporting Public disclosure Market discipline Pillar 1Pillar 2Pillar 3

11 Reporting Requirements

12 CEIOPS Reporting requirements to the supervisors Report to Supervisors (RTS) Art. 35(1) All information necessary for the purposes of supervision - Qualitative report - Quantitative reporting templates Solvency and Financial Condition Report (SFCR) Art. 50 Publicly disclosed information -Qualitative report -Quantitative reporting templates Art. 35(2) (a) (ii) and Art. 53(1) – upon occurrence of predefined events Art. 35(2) (a) (iii) – during enquiries regarding the situation of an undertaking Information to be received by the supervisory authority

13 CEIOPS Some potential reporting overlapping Solvency II:  Internal reporting, including the ORSA  IFRS/National GAAP  Tax reporting  Central banks  Central Statistical Bureau Solvency II & other reporting stakeholders

14 CEIOPS  Consult stakeholders  Discuss among members  Consider Impact Assessments for both industry and supervisors Decisions to be taken before using XBRL

15 CEIOPS  Common set of information supplemented with national specificities still to be developed and agreed  Definitions and taxonomy still to be developed  Different level of previous XBRL practises among both industry and supervisors  Is it appropriate to introduce XBRL requirements together with Solvency II considering to expected workload ? Challenges

16 CEIOPS  More smoothly exchange of information between supervisors  Cross border groups benefits from standardised requirements  Easier to build centralised databases for Financial Stability objectives Opportunities

17 CEIOPS  Among industry and/or supervisors some will not be able to fulfil timely reporting requirements – not appropriate especially in a crisis situation  Potential lack of XBRL experts around to develop functions  SME insurers increased burden/costs  National specificities and updates of contents are not easy to implement Risks ?

18 “ Experience is the name we give to our mistakes “.

19 Thank you! Thank you!

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