The European Insurance and Occupational Pensions Authority have published the final report on the results of its two peer
reviews on internal models. The purpose of the peer reviews was to assess the practices of supervisors and colleuges
related to the review of internal models during the pre-application process.
Both peer reviews cover supervisory practices in 24 Member States. Differences of supervisory practices in the pre-application process of internal models were identified in the following important areas: interpretation of the requirements; the philosophies underpinning how to review models, the use of proportionality as well as the organisation and expectations of on-site visits.
The Report summarises best practices in the areas of communication, reviews, planning, pre-application packages, training and colleges of supervisors and outlines a number of recommendations addressed to NSAs and EIOPA.
Kim Durniat, Partner in the Insurance Actuarial Practice at Barnett Waddingham, commented:
“Differing supervisory practices and limited communication within Colleges across Europe have caused many headaches for multinational insurers, with conflicting information and guidance coming from different supervisory authorities.
“EIOPA’s report on the Peer Reviews on Pre-application of Internal Models for National Supervisory Authorities (NSAs) and Colleges identifies differences in supervisor practices over several key areas. The report additionally identifies best practices and outlines recommendations issued to NSAs.
“The key themes throughout the report are to improve communication and the sharing of knowledge between NSAs, Colleges and insurance undertakings.
“Whilst many of the recommendations and best practices highlighted seem simple and common sense, we welcome the report as we feel it should go a long way in bringing supervisory convergence across Europe.”
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