Welcome to the Solvency II Association, the largest association of Solvency ii Professionals in the world
The Solvency II Directive creates a modern and risk-based prudential regime for insurance and reinsurance undertakings. Before the 1st of January, 2016, national regulatory regimes for insurance and reinsurance were not able to guarantee an efficient internal market and prevent possible future crises.
The Omnibus II directive makes significant modifications to Solvency II, in particular as regards insurance products with long-term guarantees, and adds difficulties to an already difficult implementation.
One of the main challenges for Solvency ii professionals is the procedure for assessing the fitness and propriety of the persons who effectively run the undertaking, or have other key functions, both when being considered for the specific position, and on an ongoing basis. Let's understand why.
In accordance with Article 41 of the Solvency II Directive, national competent authorities should ensure that the administrative, management or supervisory body of the undertaking, has appropriate interaction with any committee it establishes, as well as with senior management and with other key functions in the undertaking, proactively requesting information from them and challenging that information when necessary.
In accordance with Article 246 of the Solvency II Directive, national competent authorities should ensure that at group level, the administrative, management or supervisory body of the responsible entity has also an appropriate interaction with the administrative, management or supervisory bodies of all entities within the group, requesting information proactively and challenging the decisions in the matters that may affect the group.
In accordance with Article 42 of the Solvency II Directive, national competent authorities should ensure that the undertaking ensures that persons who effectively run the undertaking, or have other key functions, including members of the administrative, supervisory or management body of the undertaking, are 'fit' and take account of the respective duties allocated to individual persons, to ensure appropriate diversity of qualifications, knowledge, and relevant experience, so that the undertaking is managed and overseen in a professional manner.
In accordance with Article 42 of the Solvency II Directive, national competent authorities should ensure that the members of the administrative, management or supervisory body collectively possess appropriate qualification, experience and knowledge about at least:
a) insurance and financial markets;
b) business strategy and business model;
c) system of governance;
d) financial and actuarial analysis; and
e) regulatory framework and requirements.
In accordance with Article 41 and 42 of the Solvency II Directive, national competent authorities should ensure that the undertaking has a policy on the fit and proper requirements, which includes at least:
a) a description of the procedure for assessing the fitness and propriety of the persons who effectively run the undertaking, or have other key functions, both when being considered for the specific position and on an ongoing basis;
b) a description of the situations that give rise to a reassessment of the fit and proper requirements; and
c) a description of the fit and proper procedures for assessing other relevant personnel, not subject to the requirements of Article 42 of Solvency II Directive according to internal standards, both when being considered for the specific position and on an ongoing basis.
Insurers need to demonstrate that these persons are adequately qualified and proper to do their jobs.
Insurers and reinsurers headquartered outside the EU ('third-country insurers') are also affected. Many non-EU countries try hard to become Solvency ii Equivalent. Equivalence assessments aim to ensure that the third country regulatory and supervisory regimes provide a similar level of policyholder protection as the one provided under the Solvency II Directive.
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