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𝗘𝗜𝗢𝗣𝗔 has issued new guidance on supervising 𝗺𝗮𝘀𝘀-𝗹𝗮𝗽𝘀𝗲 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 and 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝘁𝗲𝗿𝗺𝗶𝗻𝗮𝘁𝗶𝗼𝗻 clauses. This guidance, provided in two annexes to its 2021 Opinion on risk-mitigation techniques, aims to standardize supervisory approaches across Europe.
The first annex focuses on 𝗺𝗮𝘀𝘀-𝗹𝗮𝗽𝘀𝗲 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲, offering detailed guidance for supervisors on its prudential treatment. It emphasizes ensuring a common European approach, particularly in light of recent high lapse risks in various markets. The guidance helps supervisors evaluate how elements like the measurement period, exclusions, or termination clauses affect risk transfer effectiveness and the 𝗦𝗼𝗹𝘃𝗲𝗻𝗰𝘆 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁 (𝗦𝗖𝗥). A 12-month measurement period is generally expected, aligning with the SCR time horizon.
The second annex addresses 𝘁𝗲𝗿𝗺𝗶𝗻𝗮𝘁𝗶𝗼𝗻 𝗰𝗹𝗮𝘂𝘀𝗲𝘀 𝗶𝗻 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 agreements that could undermine effective risk transfer. It highlights provisions that release the reinsurer from responsibility for legitimate losses during the treaty period and scrutinizes contracts where reinsurers can unconditionally retain transferred premiums and assets upon termination while being freed from obligations. These annexes promote supervisory convergence and fair competition within the market.

EIOPA submitted three draft technical standards and one revised guideline to the European Commission to support the implementation of the updated Solvency II Directive. The documents address criteria for identifying insurance groups under dominant or unified control, assessing cross-border activity relevance, updating lists of regional authorities for capital calculations, and revising guidance on undertaking-specific parameters. The Commission has three months to decide on adoption. These measures aim to clarify supervisory responsibilities, enhance cross-border oversight, and align technical rules with current legal frameworks, contributing to more effective and coordinated insurance supervision across the EU.

This consultation package is aimed at easing the reporting burden on insurance and reinsurance companies under the Solvency II framework. The proposed amendments seek to reduce reporting requirements by at least 26% for solo undertakings and 36% for small and non-complex undertakings. Key changes include reducing template frequency, deleting annual templates, and introducing technical simplifications. The EIOPA expects these changes to substantially reduce the burden on European insurers without compromising policyholder protection or financial stability. Stakeholders can provide feedback via the EU Survey until October 10, 2025.

The ESAs and the EU’s new Anti-Money Laundering Authority (AMLA) have signed a multilateral Memorandum of Understanding to formalize cooperation and information exchange. The agreement outlines procedures for coordination and data sharing to support effective supervision across the EU’s financial sector. It aims to enhance supervisory convergence, foster cross-sector learning, and improve consistency in applying AML/CFT rules. This MoU is part of AMLA’s broader mandate to strengthen EU-wide oversight and coordinate with national authorities and Financial Intelligence Units in combating financial crime.

This report examines how European (re)insurers address biodiversity risks, which threaten financial stability due to their complexity and links with climate risks. Despite challenges in quantifying impacts, one in five insurers references biodiversity in their risk assessments, though mostly qualitatively. Promising practices show growing awareness, but regional variations and limited metrics hinder progress. EIOPA calls for enhanced collaboration to improve data, models, and risk management, emphasizing the need to better understand the climate-biodiversity nexus and explore nature-based solutions to address insurance gaps.

The ESAs (EBA, EIOPA, and ESMA) have launched a public consultation on draft Joint Guidelines for ESG stress testing. These guidelines aim to standardize how banking and insurance sectors integrate environmental, social, and governance risks into supervisory stress tests. Key aspects include:
ESG Stress Testing Framework: Establishes a common approach for developing methodologies and standards across the EU's financial system.
Guidance on Stress Tests: Covers design, features, and organizational arrangements, including expertise, data management, and scenario analysis timelines.
Long-term Approach: Accommodates future advancements and data improvements, promoting consistency and effectiveness.
The consultation runs until September 19, 2025, allowing stakeholders to provide feedback on the draft guidelines.

This study examines how European insurance companies influence mutual fund stability, particularly during periods of significant net outflows. Utilizing Solvency II and Lipper/Eikon data, the study reveals that insurers exhibit contrarian trading behavior, purchasing fund shares when other investors divest, especially in fixed-income funds. This behavior is more pronounced for affiliated funds. The paper also finds that insurers' financial health, indicated by solvency ratios, impacts their ability to act as contrarian traders; lower solvency ratios correlate with fewer purchases during outflows. Funds with insurer investments demonstrate enhanced resilience, exhibiting lower flow-to-performance sensitivity and reduced flow volatility. The findings suggest insurers can mitigate investor runs, but their stabilizing influence may lessen under systemic stress affecting their own financial health.

The report underscores the robustness of Europe’s insurance, reinsurance, and pension sectors despite a volatile macroeconomic environment. Strong capital positions persist, with median Solvency II ratios slightly down but stable. Premium growth surged, with non-life up 8.2% and life at 13.8%. Profitability improved, with median return on assets at 0.7%. However, it points out that risks from exchange rate volatility, elevated interest rates, geopolitical tensions, and cyber threats require vigilant monitoring. It also notes significant US equity exposure, urging caution amid potential market corrections.

EIOPA has published the results of its first EU-coordinated mystery shopping exercise, assessing the sales process for insurance-based investment products (IBIPs) across eight EU member states. While distributors often provided relevant information, areas for improvement were identified in disclosure, transparency, and consumer outcomes. Key findings include inadequate provision of cost information and limited consideration of sustainability preferences. EIOPA Chair Petra Hielkema emphasized the need to explore a more outcome-oriented sales approach, focusing on simple and transparent products that offer value for consumers.

In 2024, despite global challenges like AI advancements, elections, geopolitical instability, climate events, and cyber threats, EIOPA focused on safeguarding the public interest in the European financial system. They successfully executed their work program, emphasizing sustainable insurance/pensions, digital transformation, consistent supervision, high-quality advice, and financial stability. EIOPA also initiated regulatory simplification, stressing prudence to maintain a robust framework, and will collaborate with the European Commission to enhance the Savings and Investment Union. Their ongoing commitment is to ensure a robust, resilient, and well-regulated industry for all stakeholders.