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Consultation Paper
No. 62 - Draft CEIOPS’ Advice for Level 2 Implementing Measures on
Solvency II:
Cooperation and Colleges of supervisors -
CEIOPS-CP-62/09, 2 July 2009
3.3. Coordination
arrangements
Explanatory text
3.61. According to Article 252 (2b), the
establishment and functioning of colleges shall be based on
coordination arrangements determined by the group supervisor,
following consultation with the supervisory authorities concerned.
In the case of diverging views concerning the coordination
arrangements, any member of the college may refer the matter to
CEIOPS.
The group supervisor, following the consultation with the
supervisory authorities concerned, shall duly consider any advice
produced within two months by the CEIOPS before taking its final
decision.
The decision shall be set out in a document containing the fully
reasoned decision and an explanation of any significant deviation
from any advice given by the CEIOPS.
The group supervisor shall transmit the
decision to the other supervisory authorities concerned.
3.62. Accordingly to Article 252 (2c), and without prejudice to
any measure adopted pursuant to Directive, the coordination
arrangements should specify the procedures for:
(a) the decision-making process among the supervisory authorities
concerned as referred to in
• Article 229 (group internal model) concerning the cooperation
between supervisory authorities concerned to decide whether or not
to grant the permission to calculate the consolidated SCR on the
basis of an internal model, and to determine the terms and
conditions, if any, to which such permission is subject,
• Articles 230 and 231(6) (group capital add-on)
• and Article 251 (group supervisor)
(b) the consultation referred to in paragraph 4 and in Article
216(5).
Without prejudice to the rights and duties allocated by the
directive to the group supervisor and to other supervisory
authorities, the coordination arrangements may entrust additional
tasks to the group supervisor or the other supervisory
authorities.
In addition, the coordination arrangements may specify
(a) the consultation among the supervisory
authorities concerned, in particular as referred to in
• Article 211: case of application of group
supervision
• Article 212: scope of group supervision
• Article 213: ultimate parent undertaking at Community level
• Article 214: ultimate parent undertaking at national level
• Article 215: parent undertaking covering several Member States
• Article 217: frequency of calculation
• Article 218: choice of method
• Article 219: inclusion of proportional share
• Article 225: related third-country insurance and reinsurance
undertakings
• Article 248: supervision of risk concentration
• Article 249: supervision of intra-group transactions
• Article 254: consultation between supervisory authorities
• Article 263: parent undertaking outside the Community:
verification of equivalence
• Article 264: parent undertakings outside
the Community: absence of equivalence
(b) the cooperation with other supervisory authorities.
3.63. In its advice to the European Commission on aspects of the
Framework Directive Proposal related to Insurance Groups
(CEIOPS-DOC-25/08), CEIOPS advocated that the group supervisor
together with the members of the College of Supervisors should lay
down any arrangements on group supervision in written bilateral or
multilateral agreements, addressing both regular and crisis
situations (for crisis situations see section 3.6).
3.64. As also follows from the Level 1 text article 252 (2c), such
agreements shall lay down the basis for the cooperation between
supervisors, describing the organization of the College, of
supervisory activities and the role of supervisory authorities.
3.65. CEIOPS considers that the coordination arrangements shall
mention how the cooperation and exchange of information (IT tools,
…) will be achieved, both in regular and emergency situations:
• Among the supervisory authorities within the college of
supervisors
• And, if relevant, with other supervisory authorities (whose
participation is only limited to achieving the objective of
efficient exchange of information –article 252.2a)
• And, if relevant, with other competent authorities.
3.66. The coordination arrangements should include in particular :
• A work plan on which the college of supervisors has agreed;
• An emergency plan, further described in subsection 3.6.
3.67. CEIOPS will further work for L3 measures on the content of
both plans.
3.68. The College of Supervisors shall agree on a workplan for the
supervision of the group.
The workplan shall be based on the coordination arrangements.
As further described in subsection 3.6 the College of Supervisors
shall also have an emergency plan as part of or based on the
coordination arrangements (cf. paragraph 3.96, 3.97 and 3.112).
CEIOPS’ advice
3.69. CEIOPS considers that the coordination arrangements shall
mention how the cooperation and exchange of information (IT tools,
…) will be achieved, both in regular and emergency situations:
• Among the supervisory authorities within the college of
supervisors
• And, if relevant, with other supervisory authorities (whose
participation is only limited to achieving the objective of
efficient exchange of information –article 252.2a)
• And, if relevant, with other competent authorities.
3.70. The coordination arrangements should include in particular :
• A work plan on which the college of supervisors has agreed;
• An emergency plan, further described in subsection 3.6.
3.4. Organization
Explanatory text
3.71. According to recital 75(a), the activities of the College
shall be proportionate to the nature, scale and complexity of the
risks of the group and the cross-border dimension.
Moreover, article 252 (3) states that the effective functioning of
the College may require that some activities will be carried out
by a reduced number of supervisory authorities within the college.
3.72. CEIOPS considers that flexibility is essential, meaning that
supervisors have to be allowed to organize themselves according to
the group’s structure, business model and risks.
The organization of the Colleges of Supervisors shall be
appropriate and proportionate to the organization and complexity
of the Group and to the assessment of the Group’s soundness, and
reflect the activities, risk profile and the legal structure of
the Group.
3.73. However, CEIOPS considers that additional guidance could
facilitate, subject to the need for flexibility, convergence in
supervisory practices.
This could be achieved by identifying possible multi-level
arrangements in order to increase the harmonization of regulatory
approaches while acknowledging the different roles of supervisors.
3.4.1.
Establishment of Specialized Supervisory Teams
3.74. CEIOPS noted in its previous advice (CEIOPS’s Advice to the
European Commission on aspects of the Framework Directive Proposal
related to Insurance Groups (CEIOPS-DOC-25/08)) that within the
College of Supervisors the supervisors
could have formalised roles in the on-going supervision of the
group whereupon smaller supervisory teams could be established,
depending of the specificities of the Group.
3.75. These specialized supervisory teams would discuss matters
relating to their specific topic or specific issues noted across
the group.
They would then be responsible for providing views on their
respective topics and highlighting any identified issues (e.g.
material differences in reserving methodologies across the group,
perceived governance failures in subsidiaries, low SCR coverage in
certain jurisdictions and corrective actions according
to the supervisory ladder, group ORSA
including future threats to subsidiaries solvency positions, group
financial soundness ,etc.) and recommended actions for discussion
at the College of Supervisors.
The methods and intensity of the work of the College and
supervisory teams would depend on the scale, nature and complexity
of the (re)insurance group.
3.4.2. Composition of the Specialized Supervisory Teams
3.76. Any supervisor who is able to participate in any supervisory
team would be permitted, but not obliged, to do so. However, solo
supervisors who have subsidiaries that are material to the (re)insurance
group by their scale or risk exposure would be encouraged to
participate in all the supervisory teams.
3.77. These specialized supervisory teams could comprise of the
supervisors who are able to participate in supervisory activities
such as:
• The assessment of the group solvency
position;
• The approval of the group internal model;
• The analysis of intra group transactions and risk concentration.
3.78. Supervisory teams shall also depend on the nature, scale and
complexity of the risks of the group and the cross-border
dimension.
3.4.3. Functioning of the College
3.79. All relevant activities shall be properly laid down in
coordination arrangements (see previous sub-section 3.3.).
These shall then clearly describe the activities of the College,
including in crisis situations (which is further described in
subsection 3.6), and the role of the supervisory authorities,
including by means of delegation, as also referred in article 252
(2c), or by sharing some operational activities.
CEIOPS notes the ongoing 3L3 work on the delegation of tasks and
responsibilities.
3.80. The College of Supervisors shall meet regularly, depending
on the risk-based assessment made by the College.
This should be at least annually.
However, considering the proportionality principle, the meeting
may take different forms.
The College may consider it appropriate in some cases to exchange
information by other channels, including the use of telephone
conference, video conference, email and letter.
Face-to-face meetings are nevertheless considered essential for
more complex groups, at least for an initial meeting, or for
extraordinary circumstances (e.g. crisis (see 3.6.)).
3.81. The group supervisor after dialogue within the College
should be responsible for the communication with the group at its
top level (parent level).
Solo supervisors should then communicate any measures applied at
top level to the subsidiaries.
3.82. The initiative to convene the College of Supervisors shall
be taken by the group supervisor except in justified
circumstances.
CEIOPS’ advice
3.83. The College of Supervisors shall meet regularly, depending
on the risk-based assessment made by the College.
The initiative to convene the College of Supervisors shall be
taken by the group supervisor except in justified circumstances.
Colleges of Supervisors:
Colleges of Supervisors - Introduction
Colleges of Supervisors - Advice
Colleges of Supervisors - Membership and Participation in the
College
Colleges of Supervisors - Coordination Arrangements
Colleges of Supervisors - Professional Secrecy and Confidentiality
Colleges of Supervisors - Coordination Cooperation
  
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