EIOPA Moves Forward on Macroprudential Standards
EIOPA has published its final report on the draft 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗧𝗲𝗰𝗵𝗻𝗶𝗰𝗮𝗹 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀 (𝗥𝗧𝗦) that will shape how insurers integrate macroprudential risk into both the 𝗢𝗥𝗦𝗔 and the 𝗣𝗿𝘂𝗱𝗲𝗻𝘁 𝗣𝗲𝗿𝘀𝗼𝗻 𝗣𝗿𝗶𝗻𝗰𝗶𝗽𝗹𝗲 (𝗣𝗣𝗣). These RTS are a key outcome of the Solvency II review and aim to ensure consistent, proportionate application of the new macroprudential requirements across the EU.
At the heart of the RTS is a hybrid identification approach for determining which undertakings must perform enhanced macroprudential analyses:
🔹 𝗤𝘂𝗮𝗻𝘁𝗶𝘁𝗮𝘁𝗶𝘃𝗲 𝗧𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱
Insurers and groups with total assets above EUR 20 billion are presumptively in scope. This threshold—raised from the initially proposed EUR 12 billion after consultation—accounts for inflation and seeks to balance financial stability monitoring with regulatory burden.
🔹 𝗤𝘂𝗮𝗹𝗶𝘁𝗮𝘁𝗶𝘃𝗲, 𝗥𝗶𝘀𝗸-𝗕𝗮𝘀𝗲𝗱 𝗖𝗿𝗶𝘁𝗲𝗿𝗶𝗮
Supervisors can add entities below the threshold or exclude those above it based on:
• Interconnectedness with the financial system
• Systemically relevant activities (e.g., derivatives use, common exposures, guarantees, VA products)
• Substitutability concerns
• Liquidity risk
• Duration mismatch, leverage, or reliance on illiquid/opaque assets (for PPP analyses)
This flexibility should ensure proportionality while maintaining a consistent baseline for supervisory convergence.
The RTS respond to new legislative mandates introduced by the 𝗦𝗼𝗹𝘃𝗲𝗻𝗰𝘆 𝗜𝗜 review (Directive (EU) 2025/24), which require insurers to consider both outside-in and inside-out risks—reflecting EIOPA’s view that systemic risk in insurance can emerge through direct failure of key players or through behaviors that amplify shocks across the market.
Public consultation (Oct 2024–Jan 2025) generated valuable feedback, particularly around the asset threshold and the challenge of assessing “inside-out” systemic risks. EIOPA’s final approach is intended to reflect these insights while staying true to its mandate: strengthening the macroprudential framework without imposing unnecessary burdens.
The desired result is a balanced, forward-looking framework that enhances supervisory dialogue, supports financial stability, and reinforces the link between micro- and macroprudential perspectives.
The final RTS have now been submitted to the European Commission for adoption.
At the heart of the RTS is a hybrid identification approach for determining which undertakings must perform enhanced macroprudential analyses:
🔹 𝗤𝘂𝗮𝗻𝘁𝗶𝘁𝗮𝘁𝗶𝘃𝗲 𝗧𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱
Insurers and groups with total assets above EUR 20 billion are presumptively in scope. This threshold—raised from the initially proposed EUR 12 billion after consultation—accounts for inflation and seeks to balance financial stability monitoring with regulatory burden.
🔹 𝗤𝘂𝗮𝗹𝗶𝘁𝗮𝘁𝗶𝘃𝗲, 𝗥𝗶𝘀𝗸-𝗕𝗮𝘀𝗲𝗱 𝗖𝗿𝗶𝘁𝗲𝗿𝗶𝗮
Supervisors can add entities below the threshold or exclude those above it based on:
• Interconnectedness with the financial system
• Systemically relevant activities (e.g., derivatives use, common exposures, guarantees, VA products)
• Substitutability concerns
• Liquidity risk
• Duration mismatch, leverage, or reliance on illiquid/opaque assets (for PPP analyses)
This flexibility should ensure proportionality while maintaining a consistent baseline for supervisory convergence.
The RTS respond to new legislative mandates introduced by the 𝗦𝗼𝗹𝘃𝗲𝗻𝗰𝘆 𝗜𝗜 review (Directive (EU) 2025/24), which require insurers to consider both outside-in and inside-out risks—reflecting EIOPA’s view that systemic risk in insurance can emerge through direct failure of key players or through behaviors that amplify shocks across the market.
Public consultation (Oct 2024–Jan 2025) generated valuable feedback, particularly around the asset threshold and the challenge of assessing “inside-out” systemic risks. EIOPA’s final approach is intended to reflect these insights while staying true to its mandate: strengthening the macroprudential framework without imposing unnecessary burdens.
The desired result is a balanced, forward-looking framework that enhances supervisory dialogue, supports financial stability, and reinforces the link between micro- and macroprudential perspectives.
The final RTS have now been submitted to the European Commission for adoption.