The Solvency ii
Directive
Article 31
Prohibition of
refusal of reinsurance contracts or retrocession contracts
1.
The home Member State of an insurance undertaking shall
not refuse a
reinsurance contract concluded with a reinsurance undertaking or an
insurance undertaking authorised in accordance with Article 14 on
grounds directly related to the financial soundness of that
reinsurance undertaking or that insurance undertaking.
2. The
home Member State of the reinsurance undertaking shall
not refuse a
retrocession contract concluded by a reinsurance undertaking with a
reinsurance undertaking or an insurance undertaking authorised in
accordance with Article 14 on grounds directly related to the
financial soundness of that reinsurance undertaking or that
insurance undertaking.
Article 32
Supervision of
branches established in another Member State
Member States
shall provide that, where an insurance or reinsurance undertaking
authorised in another Member State carries on business through a
branch, the supervisory authorities of the home Member State may,
after having informed the supervisory authorities of the host Member
State concerned, carry out themselves, or through the intermediary
of persons appointed for that purpose, on-site verifications
of the
information necessary to ensure the financial supervision of the
undertaking.
The authorities of the host Member State
concerned may participate in those
verifications.
Article 33 ---
Article 34
General
supervisory powers
1. Member States shall ensure that the
supervisory authorities have the power to take preventive and
corrective measures to ensure that insurance and reinsurance
undertakings comply with the laws, regulations and administrative
provisions with which they have to comply with in each Member
State.
2. The supervisory authorities shall have the power to
take any necessary measures, including where appropriate, those of
an administrative or financial nature, with regard to insurance or
reinsurance undertakings, and the members of their administrative or
management body or the persons who control that body.
3.
Member States shall ensure that supervisory authorities have the
power to require all information necessary to conduct supervision in
accordance with Article 35.
4. Member States shall ensure
that supervisory authorities have the power to develop, in addition
to the calculation of the Solvency Capital Requirement and where
appropriate, and necessary quantitative tools under the supervisory
review process to assess the ability of the insurance or reinsurance
undertakings to cope with possible events or future changes in
economic conditions that could have unfavourable effects on their
overall financial standing.
The supervisory authorities shall have
the power to require that such tests are performed by the
undertakings.
5. The supervisory authorities shall have the
power to carry out on-site investigations at the premises of the
insurance and reinsurance undertakings.
6. Supervisory
powers shall be applied in a timely and proportionate
manner.
7. The powers with regard to insurance and
reinsurance undertakings referred to in paragraphs 1 to 5 shall also
be available with regard to outsourced activities of insurance and
reinsurance undertakings.
8. The measures set out in
paragraphs 1 to 5 and 7 shall be carried out, if need be by
enforcement, where appropriate, through judicial
channels.
Article 35
Information to be provided
for supervisory purposes
1. Member States shall require
insurance and reinsurance undertakings to submit to the supervisory
authorities the information which is necessary for the purposes of
supervision.
That information shall include at least the information
necessary for the following when performing the process referred to
in Article 36:
(a) to assess the system of governance applied
by the undertakings, the business they are carrying on, the
valuation principles applied for solvency purposes, the risks faced
and the risk management systems, and their capital structure, needs
and management;
(b) to make any appropriate decisions
resulting from the exercise of their supervisory rights and
duties.
2. Member States shall ensure that the supervisory
authorities have the following powers:
(a) to determine the
nature, the scope and the format of the information referred to in
paragraph 1 which they require insurance and reinsurance
undertakings to submit at the following points in time:
(i)
at predefined periods;
(ii) upon occurrence of predefined
events;
(iii) during enquiries regarding the situation of an
insurance or reinsurance undertaking;
(b) to obtain any
information regarding contracts which are held by intermediaries
or
regarding contracts which are entered into with third
parties;
(c) to require information from external experts,
such as auditors and actuaries.
3. The information referred
to in paragraphs 1 and 2 shall comprise the following:
(a)
qualitative or quantitative elements, or any appropriate combination
thereof;
(b) historic, current or prospective elements, or
any appropriate combination thereof;
(c) data from internal
or external sources, or any appropriate combination
thereof.
4. The information referred to in paragraphs 1 and 2
shall comply with the following principles:
(a) it must
reflect the nature, scale and complexity of the business of the
undertaking concerned, and in particular the risks inherent to that
business;
(b) it must be accessible, complete in all material
respects, comparable and consistent over time;
(c) it must be
relevant, reliable and comprehensible.
5. Member States shall
require insurance and reinsurance undertakings to have appropriate
systems and structures in place to fulfil the requirements laid down
in paragraphs 1 to 4 as well as a written policy, approved by the
administrative or management body of the insurance or reinsurance
undertaking, ensuring the on-going appropriateness of the
information submitted.
6. The Commission shall adopt
implementing measures specifying the information referred to in
paragraphs 1 to 4, with a view to ensuring to the appropriate extent
convergence of supervisory reporting.
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).
Article 36
Supervisory review
process
1. Member States shall ensure that the supervisory
authorities review and evaluate the strategies, processes and
reporting procedures which are established by the insurance and
reinsurance undertakings to comply with the laws, regulations and
administrative provisions adopted pursuant to this
Directive.
That review and evaluation shall comprise the
assessment of the qualitative requirements relating to the system of
governance, the assessment of the risks which the undertakings
concerned face or may face and the assessment of the ability of
those undertakings to assess those risks taking into account the
environment the undertakings are operating in.
2. The
supervisory authorities shall in particular review and evaluate
compliance with the following:
(a) the system of governance,
including the own risk and solvency assessment, as set out in
Chapter IV, Section 2;
(b) the technical provisions as set
out in Chapter VI, Section 2;
(c) the capital requirements as
set out in Chapter VI, Sections 4 and 5;
(d) the investment
rules as set out in Chapter VI, Section 6;
(e) the quality
and quantity of own funds as set out in Chapter VI, Section
3;
(f) where the insurance or reinsurance undertaking uses a
full or partial internal model, on-going compliance with the
requirements for full and partial internal models set out in Chapter
VI, Section 4, Subsection 3.
3. The supervisory authorities
shall have in place appropriate monitoring tools that enable them to
identify deteriorating financial conditions in an insurance or
reinsurance undertaking and to monitor how that deterioration is
remedied.
4. The supervisory authorities shall
assess the
adequacy of the methods and practices of the insurance and
reinsurance undertakings designed to identify possible events or
future changes in economic conditions that could have adverse
effects on the overall financial standing of the undertaking
concerned.
The supervisory authorities shall assess the
ability of the undertakings to withstand those possible events or
future changes in economic conditions.
5. The supervisory
authorities shall have the necessary powers to require insurance and
reinsurance undertakings to remedy weaknesses or deficiencies
identified in the supervisory review process.
6. The reviews,
evaluations and assessments referred to in paragraphs 1, 2 and 4
shall be conducted regularly.
The supervisory authorities
shall establish the minimum frequency and scope of the reviews,
evaluations and assessments referred to in paragraphs 1, 2 and 4
having regard to the nature, scale and complexity of the activities
of the insurance or reinsurance undertaking
concerned.
Article 37
Capital add-on
1.
Following the supervisory review process supervisory authorities may
in exceptional circumstances set a capital add-on for an insurance
or reinsurance undertaking by a decision stating the reasons.
That
possibility shall only exist in the following cases:
(a) the
supervisory authority concludes that the risk profile of the
insurance or reinsurance undertaking deviates significantly from the
assumptions underlying the Solvency Capital Requirement, as
calculated using the standard formula in accordance with Chapter VI,
Section 4, Subsection 2 and:
(i) the requirement to use an
internal model under Article 117 is inappropriate or has been
ineffective; or
(ii) while a partial or full internal model
is being developed in accordance with Article 117;
(b) the
supervisory authority concludes that the risk profile of the
insurance or reinsurance undertaking deviates significantly from the
assumptions underlying the Solvency Capital Requirement, as
calculated using an internal model or partial internal model in
accordance with Chapter VI, Section 4, Subsection 3, because certain
quantifiable risks are captured insufficiently and the adaptation of
the model to better reflect the given risk profile has failed within
an appropriate timeframe;
(c) the supervisory authority
concludes that the system of governance of an insurance or
reinsurance undertaking deviates significantly from the standards
laid down in Chapter IV, Section 2, that those deviations prevent it
from being able to properly identify, measure, monitor, manage and
report the risks that it is or could be exposed to and the
application of other measures is in itself unlikely to improve the
deficiencies sufficiently within an appropriate timeframe.
2.
In the cases set out in points (a) and (b) of paragraph 1 of this
Article the capital add-on shall be calculated in such a way as to
ensure that the undertaking complies with Article 101(3).
In
the cases set out in point (c) of paragraph 1 of this Article the
capital add-on shall be proportionate to the material risks arising
from the deficiencies which gave rise to the decision of the
supervisory authority to set the add-on.
3. In the cases set
out in points (b) and (c) of paragraph 1 the supervisory authority
shall ensure that the insurance or reinsurance undertaking makes all
efforts to remedy the deficiencies that led to the imposition of the
capital add-on.
4. The capital add-on referred to in
paragraph 1 shall be reviewed at least once a year by the
supervisory authority and be removed when the undertaking has
remedied the deficiencies which led to its
imposition.
5. The Solvency Capital Requirement
including the capital add-on imposed shall replace the inadequate
Solvency Capital Requirement.
Notwithstanding subparagraph 1
the Solvency Capital Requirement should not include the capital
add-on imposed in accordance with point (c) of paragraph 1 for the
purposes of the calculation of the risk margin referred to in
Article 76(5).
6. The Commission shall adopt implementing
measures laying down further specifications for the circumstances
under which a capital add-on may be imposed and the methodologies
for the calculation thereof.
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).
Article
38
Supervision of outsourced functions and
activities
1. Without prejudice to Article 48, Member States
shall ensure that insurance or reinsurance undertakings which
outsource a function or an insurance or reinsurance activity take
the necessary steps to ensure that the following conditions are
satisfied:
(a) the service provider must cooperate with the
supervisory authorities of the insurance and reinsurance undertaking
in connection with the outsourced function or activity;
(b)
the insurance and reinsurance undertakings, their auditors and the supervisory authorities must have effective access to data related
to the outsourced functions or activities;
(ba) the
supervisory authorities must have effective access to the business
premises of the service provider and must be able to exercise
those rights of access.
2. The Member State where the service
provider is located shall permit the supervisory authorities of the
insurance or reinsurance undertaking to carry out themselves, or
through the intermediary of persons they appoint for that purpose,
on-site inspections at the premises of the service provider. The
supervisory authority of the insurance or reinsurance undertaking
shall inform the appropriate authority of the Member State of the
service provider prior to conducting the on-site inspection. In the
case of a non-supervised entity the appropriate authority shall be
the supervisory authority.
The supervisory authorities of the
Member State of the insurance or reinsurance undertaking may
delegate such on-site inspections to the supervisory authorities of
the Member State where the service provider is
located.
Article 39
Transfer of
portfolio
1. Under the conditions laid down by national law,
Member States shall authorise insurance and reinsurance undertakings
with head offices within their territory to transfer all or part of
their portfolios of contracts, concluded either under the right of
establishment or the freedom to provide services, to an accepting
undertaking established within the Community.
Such transfer
may only be authorised if the supervisory authorities of the home
Member State of the accepting undertaking certify that after taking
the transfer into account the accepting undertaking possesses the
necessary eligible own funds to cover the Solvency Capital
Requirement referred to in Article 100 subparagraph 1.
2. In
the case of insurance undertakings paragraphs 3 to 6 shall apply.
3. Where a branch proposes to transfer all or part of its
portfolio of contracts, the Member State where that branch is
situated shall be consulted.
4. In the circumstances referred
to in paragraphs 1 and 3, the supervisory authorities of the home
Member State of the transferring insurance undertaking shall
authorise the transfer after obtaining the agreement of the authorities of the Member States where the contracts were concluded
either under the right of establishment or the freedom to provide
services.
5. The authorities of the Member States consulted
shall give their opinion or consent to the authorities of the home
Member State of the transferring insurance undertaking within three
months of receiving a request for consultation.
The absence
of any response within that period from the authorities consulted
shall be considered as tacit consent.
6. A transfer of
portfolio authorised in accordance with paragraphs 1 to 5
shall be
published either prior to or following authorisation as laid down by
national law of the home Member State or in Member State in which
the risk is situated, or in the Member State of the
commitment.
Such transfers shall automatically be valid
against policyholders, the insured persons and any other person
having rights or obligations arising out of the contracts
transferred.
The first and second subparagraphs of this
paragraph shall not affect the right of the Member States to give
policyholders the option of cancelling contracts within a fixed
period after a transfer.
  
Return to Index
Solvency ii Introduction (1) to (10)
Solvency ii Introduction (11) to (20)
Solvency ii Introduction (21) to (30)
Solvency ii Introduction (31) to (40)
Solvency ii Introduction (41) to (50)
Solvency ii Introduction (51) to (60)
Solvency ii Introduction (61) to (70)
Solvency ii Introduction (71) to (80)
Solvency ii Introduction (81) to (95)
Solvency ii Articles 1 to 10
Solvency ii Articles 11 to 20
Solvency ii Articles 21 to 30
Solvency ii Articles 31 to 39
Solvency ii Articles 40 to 49
Solvency ii Articles 50 to 62
Solvency ii Articles 63 to 71
Solvency ii Articles 72 to 85
Solvency ii Articles 86 to 99
Solvency ii Articles 100 to 125
Solvency ii Articles 126 to 142
Solvency ii Articles 143 to 159
Solvency ii Articles 160 to 173
Solvency ii Articles 174 to 203
Solvency ii Articles 204 to 215
Solvency ii Articles 216 to 233
Solvency ii Articles 234 to
262
Solvency ii Articles 263 to 298
Solvency ii Articles 300 to 313
Solvency ii ANNEX 1 to 3
Solvency ii ANNEX 4 to 5
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