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EIOPA: “A change in the legal framework is the only way”

“EIOPA took note of the feedback provided by the industry in 2018 on why the publication of individual stress test results was extremely limited,” wrote the regulator in a four-page document signed by chair Petra Hielkema (pictured) and published on Tuesday. “EIOPA worked on further enhancing the stress test framework, thereby addressing the concerns expressed by the industry.

“Additionally, EIOPA extensively engaged on the topic with various stakeholders, again including their feedback in its work. Moreover, EIOPA defined the information to be published in order to address the specificities of the sector and its prudential framework and avoid potential misinterpretation of the results.”

The watchdog, however, lamented: “Despite these steps, most insurers continue to show reluctance and individual disclosures are still more of an exception than a standard for the industry. While in 2018 only four out of 42 consented to the publication of individual data, the number of undertakings that gave consent in the last exercise was only eight out of 44 participants.”

Read more: EIOPA publishes insurance stress test recommendations

The current regulation does not permit EIOPA to communicate the individual results of each financial institution – unlike the European Banking Authority, which may disclose such information. To hopefully change that, EIOPA put forward a proposal to the European Parliament, the Council, and the Commission.

“EIOPA considers that a change in the legal framework is the only way to obtain the disclosure of individual information,” it declared.

Hielkema, when the proposed amendments were announced, stated: “Our experience over the past years has shown that without making it a legal requirement, individual disclosures would, in all likelihood, remain the exception rather than the standard for the sector.

“We have now taken the initiative to ensure that (re)insurers adhere to similar levels of transparency as other parts of the financial system. The insurance industry and its regulatory framework are robust enough and ready for this change.”

Source: www.insurancebusinessmag.com

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