Insurance & Asset Management Update – May
  • Friday, 29 May 2020

Insurance & Asset Management Update – May

Impact of Covid-19 on regulations

IFRS 17 and IFRS 9 for insurance companies definitively postponed to January 2023. The International Accounting Standards Board (IASB) decided that the effective date of IFRS 17 Insurance Contracts will be deferred to 1 January 2023. It was also decided to extend the exemption for insurance companies, whose business model is majorly based on issuing insurance policies, regarding the application of IFRS 9 Financial Instruments. This enables these insurance companies to implement both standards at the same time. The IASB expects to issue the amendments in the second quarter of 2020.

EIOPA revises timetable for Solvency II review

The European Insurance and Occupational Pensions Authority (EIOPA) postpones its advice to the European Commission (EC) in relation to the Solvency II review to December 2020. The decision has been made in agreement with the EC and is a response to the current Covid-19 situation. As a result, insurers have two months more, namely until 1 June 2020, to respond to the information request by EIOPA. Additionally, EIOPA plans to submit a complementary data request with a reference date of 30 June 2020, which will be more focussed on specific topics than the previous one.

Update on other EIOPA measures impacted by Covid-19

EIOPA extended the deadlines for several open consultations and discussion papers. These concerns, amongst other, the comments regarding the review of the technical implementation means for Solvency II reporting and the comments on the discussion on IBOR transitions.

Information requests to financial institutions have also been postponed or cancelled. The data collection regarding the impact of ultra-low yields on insurers is postponed to later this year. The climate risk sensitivity analysis 2020 will commence with the already collected information. However, there will be no further data requests to complete the available data. Lastly, the long-term guarantee review has been cancelled for 2020.

Please contact Lennard Beijering or Nicolas Ziob for more information about the impact of Covid-19 on regulations.

Basel committee and IOSCO defer final implementation phases of margin requirements

Due to Covid-19, the Basel Committee on Banking Supervision (BCBS) and International Organization of Securities Commissions (IOSCO) agreed to postpone the final two implementation phases of the margin requirements for non-centrally cleared derivatives by one year. With this extension, as of 1 September 2021 entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than €50 billion will be subject to the new margin requirements.

The second phase follows a year later and includes all entities with an AANA greater than €8 billion of non-centrally cleared derivatives. BCBS and IOSCO published a revised version of the margin requirements to reflect this revision. In addition, the European Supervisory Authorities, the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and EIOPA, published joint draft Regulatory Technical Standards (RTS) to incorporate this one-year deferral into the EU regulatory framework.

Please contact Martijn de Groot or Bas van Oers for more information about the implementation of margin requirements.

Climate change

IOSCO steps up its efforts to address issues around sustainability and climate change. The Board of the International Organization of Securities Commissions (IOSCO) published a report on Sustainable Finance and the Role of Securities Regulators and IOSCO.

The report seeks to help market participants in addressing issues related to sustainability and climate change and identifies three recurring issues in this area:

    • Multiple and diverse sustainability frameworks and standards, which creates challenges for investors and other stakeholders when comparing investments
    • Lack of common definitions of sustainable activities, which result in a limited transparency and comparability of material information
    • Greenwashing and other investor protection challenges

To step up its efforts in resolving these issues, IOSCO created a task force, focused on improving disclosures regarding sustainability, promoting collaboration to prevent double efforts, and preparing case studies and analyses on, among others, transparency and investor protection.

European Supervisory Authorities consult on ESG disclosure rules

The European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and EIOPA have published a consultation paper to gather input on the proposed standards for environmental, social and governance (ESG) disclosure. These standards aim to strengthen protection for end-investors, improve the disclosures from a broad range of market participants to investors regarding financial products. The report discusses both entity-level and product level disclosures.

Please contact Martijn de Groot or Bas van Oers for more information about the impact of climate change and the use of ESG factors.