Insurance and reinsurance undertakings across the European Economic Area (EEA) are gearing up for the implementation of Pillar 3 of the Solvency II Directive first published in 2009 (2009/138/EC) and amended later. Originally slated to start in January 2014, Pillar 3 disclosure mandates are now ready to go live in January 2016.
Solvency II has two very simple objectives:
Solvency II ensures that apart from insurance risk, insurers now also watch out for market and operational risks. Solvency II is visualized as a building made up of three pillars:
Pillar 1: Risk and Capital Adequacy. This pillar takes care of Insurance risk.
Pillar 2: Other Risks and Governance. This takes into account qualitative and quantitative factors that determine long-term solvency and risk exposure.
Pillar 3: Disclosure Requirements. This clarifies the types of specific disclosure to specific stakeholders, essentially what needs to be disclosed and to which stakeholders.
Adherence to Solvency II will be enforced by two levels of regulators:
Insurance and reinsurance undertakings must submit their Pillar 3 documents to their relevant NSAs. The NSAs, in turn, are required to file these documents to the EIOPA.
As an insurer, you’re required to file two documents:
Insurers in some countries may publish National Specific Templates (NSTs) that insurers within their jurisdiction will have to file in addition to those mandated by the EIOPA.
Both RSRs and SFCRs have quantitative reports whose templates have been published by the EIOPA, as well as qualitative reports. The Quantitative Reporting Templates (QRTs) need to be submitted in XBRL and the qualitative reports in PDF. The NSTs are all in the form of QRTs.
As an insurer, you must ensure that your filing mechanisms are in place. Solvency II Pillar 3 requirements are complicated and lengthy. Watch this space for more details in the next few months.
 EIOPA (formed in January 2011) is the successor to the CEIOPS (Committee of European Insurance and Occupational Pensions Supervisors) under the new European Financial Supervision Framework.
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