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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