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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
1. Introduction
1.1. In its letter of 19 July 2007, the European Commission
requested CEIOPS to provide final, fully consulted advice on Level
2 implementing measures by October 2009 and recommended CEIOPS to
develop Level 3 guidance on certain areas to foster supervisory
convergence.
On 12 June 2009 the European Commission sent a letter with further
guidance regarding the Solvency II project, including the list of
implementing measures and timetable until implementation.
1.2. This Consultation Paper aims at providing
advice for Level 2 measures with regard to
the coordination of group supervision along with supporting
material that could be used to develop Level 3 guidance.
The Solvency II Level 1 text (herein “Level 1 text”) calls for
implementing measures on the coordination of group supervision is
Articles 252 (3) and 253 (2).
2. Extract from Level 1 text
2.1. The Level 1 text sets out in Article
253 principles requiring cooperation
and exchange of information between supervisory authorities.
“1. The authorities responsible for the supervision of the
individual insurance and reinsurance undertakings in a group and
the group supervisor shall cooperate
closely, in particular in cases where an insurance or reinsurance
undertaking encounters financial difficulties.
With the objective of ensuring that the supervisory authorities,
including the group supervisor, have the
same amount of relevant information available to them,
without prejudice to their respective responsibilities, and
whether or not established in the same Member State,
they shall provide one another with such
information in order to allow and facilitate the exercise of the
supervisory tasks of the other authorities under this Directive.
In this regard, the supervisory authorities concerned and the
group supervisor shall communicate without delay to one another
all relevant information as soon as it
becomes available.
The information referred to in this subparagraph includes, but is
not limited to, information about actions of the group and
supervisors, and information provided by the group.
1a. The authorities responsible for the supervision of the
individual insurance and reinsurance undertakings in a group and
the group supervisor shall
each call immediately for a meeting of all supervisors
involved in group supervision in at least the
following cases:
(a) when they become aware of a significant
breach of the Solvency Capital Requirement or a breach of the
Minimum Capital Requirement of an individual insurance or
reinsurance undertaking; or
(b) when they become aware of a significant
breach of the Solvency Capital Requirement at group level
calculated on the basis of consolidated data or the aggregated
group Solvency Capital Requirement, in accordance with which
method according to Title III, Chapter II, Section 1, Subsection
4, is used;
(c) when other exceptional circumstances
occur or have occurred.
2. The Commission shall adopt implementing measures determining
the items which are, on a systematic basis, to be gathered by the
group supervisor and disseminated to other supervisory authorities
concerned or to be transmitted to the group supervisor by the
other supervisory authorities concerned.
The Commission shall adopt implementing measures specifying the
items essential or relevant for supervision at group level with a
view to enhancing convergence of supervisory reporting.
The measures referred to in the first and second subparagraphs
designed to amend nonessential elements of this Directive by
supplementing it shall be adopted in accordance with the
regulatory procedure with scrutiny referred to in Article 304(3).”
2.2. The recital further reinforces the
importance of establishing an appropriate exchange of information
and a close cooperation between the group supervisor and the
authorities for the supervision of individual undertakings in
order to meet supervisory challenges and objectives.
2.3. (70a) All supervisors involved in group supervision should be
able to understand the decisions
made, in particular when those decisions are made by the group
supervisor.
When it becomes available to one of the supervisors, the relevant
information should therefore as soon as it becomes available be
shared with the other supervisors, in order for
all supervisors to be able to establish an
opinion based on the same relevant information.
In the event that the supervisors concerned cannot reach an
agreement, qualified advice from CEIOPS should be sought to
resolve the situation.”
Moreover article 257 on Professional secrecy and confidentiality
states that:
“Member States shall authorise the exchange of the information
between their supervisory authorities and between their
supervisory authorities and other authorities, as referred to in
Articles 253 to 256.
Information received in the framework of group supervision, and in
particular any exchange of information between supervisory
authorities and between supervisory authorities and other
authorities which is provided for in this Title,
shall be subject to the provisions on
professional secrecy and communication of confidential information
laid down in Article 297.”
2.4. Additionally, the General approach on the Solvency II
Directive (“Level 1 text”) introduces on article 252 provisions on
the College of Supervisors.
“1. The rights and duties assigned to the
group supervisor with regard to group supervision shall comprise
the following:
(a) coordination of the gathering and dissemination of relevant or
essential information for going concern and emergency situations,
including the dissemination of information which is of importance
for the supervisory task of a supervisory authority;
(b) supervisory review and assessment of the financial situation
of the group;
(c) assessment of compliance of the group with the rules on
solvency and of risk concentration and intra-group transactions as
set out in Articles 216 to 249;
(d) assessment of the system of governance of the group, as set
out in Article 250, and of whether the members of the
administrative or management body of the participating undertaking
meet the requirements set out in Article 42 and Article 261;
(e) planning and coordination, through regular meetings held at
least annually or other appropriate means, of supervisory
activities in going concern as well as in emergency situations, in
cooperation with the supervisory authorities concerned and taking
into account the nature, scale and complexity of the risks
inherent in the business of all undertakings that are part of the
group;
(f) other tasks, measures and decisions assigned to the group
supervisor by this Directive or deriving from the application of
this Directive, in particular leading the process for validation
of any internal model at group level as set out in Articles 229
and 231 and leading the process for permitting the application of
the regime established in articles 235, 236, 238 and 242.
2. In order to facilitate group supervision, a college of
supervisors, chaired by the group supervisor, shall be established
to facilitate the exercise of the tasks referred to in the first
paragraph.
The college of supervisors shall assure that cooperation, exchange
of information and consultation processes among the supervisory
authorities of the college, are effectively applied in accordance
with Title III of this Directive, with a view to promoting the
convergence of their respective decisions and activities.
3.
The membership of the college shall include the group supervisor
and supervisory authorities of all the Member States in which the
head office of all subsidiary undertakings is situated.
The supervisory authorities of
significant branches
and related undertakings shall also be allowed to participate in
the colleges of supervisors.
However, their participation shall only be
limited to achieving the objective of efficient exchange of
information.
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.
4. Without prejudice to any measure adopted pursuant to this
Directive, the establishment and functioning of colleges shall be
based on coordination arrangements concluded by the group
supervisor and the other supervisory authorities concerned.
In the case of diverging views
concerning the coordination arrangements, any member of the
college may refer the matter to the Committee of European
Insurance and Occupational Pension Supervisors.
The group supervisor, following the consultation with the
supervisory authorities concerned, shall duly consider any advice
produced within two months by the Committee of European Insurance
and Occupational Pension Supervisors 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 Committee of European Insurance and
Occupational Pension Supervisors.
The group supervisor shall transmit the decision to the other
supervisory authorities concerned.
5. Without prejudice to any measure adopted pursuant to this
Directive, the coordination arrangements
shall specify the procedures for:
(a) the decision-making process among the
supervisory authorities concerned as referred to in Articles 229,
230 and 251;
(b) the consultation referred to in paragraph 4 and in Article
216(5).
Without prejudice to the rights and duties allocated by this
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 the cases where this results in
a more efficient supervision of the group, and it does not impair
the supervisory activities of the members of the college in
respect of their individual responsibilities.
In addition, the coordination arrangements
may specify:
(a) the consultation among the supervisory authorities concerned,
in particular as referred to in Articles 211, 212, 213, 214, 215,
217, 218, 219, 225, 248, 249, 250, 254, 260, 263 and 264;
(b) the cooperation with other supervisory
authorities.
6. The Committee of European Insurance and Occupational Pensions
Supervisors shall elaborate guidelines for the operational
functioning of colleges on the basis of comprehensive reviews of
the work of the colleges to assess the level of convergence
between them.
Such reviews shall be performed at least every three years.
Member states shall ensure that the group supervisor transmit to
the Committee of European Insurance and Occupational Pensions
Supervisors the information, on the functioning of the college and
any difficulties encountered, relevant for the reviews.
7. The Commission shall adopt implementing measures for the
coordination of group supervision for the purposes of paragraphs 1
to 6, including the definition of a significant branch.
Those measures designed to amend non-essential elements of this
Directive by supplementing it shall be adopted in accordance with
the regulatory procedure with scrutiny referred to in Article
304(3).
2.5. The recital further explains that objective as follows:
“(74) All insurance or reinsurance groups
subject to group supervision should have a group supervisor
appointed from among the supervisory authorities involved.
The rights and duties of the group supervisor should comprise
appropriate coordination and decision-making powers.
The authorities involved in the supervision of insurance and
reinsurance undertakings belonging to the
same group should establish coordination arrangements.”
“(75) Supervisors from all Member States in which undertakings of
the group are established should be involved in group supervision
through a college of supervisors.
They should all have access to information available with other
supervisory authorities within the college and they should be
dynamically involved in decision-making.
Cooperation between the authorities responsible for the
supervision of insurance and reinsurance undertakings as well as
between those authorities and the authorities responsible for the
supervision of undertakings active in other financial sectors
should be established.”
“(75a) The activities of the college shall
be proportionate to the nature, scale and complexity of the risks
inherent in the business of all undertakings that are part of the
group and the cross border dimension.
The college of supervisors shall be set up to ensure that
cooperation, exchange of information and consultation processes
among the supervisory authorities of the college, are effectively
applied in accordance with Title III of this Directive.
Supervisory authorities shall use the college to promote
convergence of their respective decisions and to cooperate closely
to carry out their supervisory activities across the group under
harmonised criteria.”
“(75b) This Directive provides a consultative role for CEIOPS.
Advice by CEIOPS to the relevant supervisor is not binding on that
supervisor when taking its decision.
When taking a decision, the relevant supervisor should take full
account of that advice and shall explain any significant deviation
therefrom.
It is advice that supervisors may not wish to ignor.”
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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