The European Insurance and Occupational Pensions Authority (EIOPA) has launched a consultation on a draft Annex to its Opinion on risk mitigation techniques, targeting proportional reinsurance treaties with features that could undermine the balance between solvency capital requirement (SCR) relief and the actual transfer of risk. The draft Annex focuses on proportional reinsurance structures where mechanisms such as loss limits or sliding-scale commissions may materially reduce risk transfer while leaving the standard formula SCR impact largely unchanged. It proposes that undertakings entering into material treaties with such features should assess, including via simulations and tests, whether risk transfer is commensurate with the SCR relief and, where it is not, the risk-mitigating effect should not be recognised in the SCR calculation. The proposals allow qualitative assessments to substitute for tests where appropriate and emphasise proportional application. The consultation package also addresses reinsurance commissions, reinforcing Q&A 1898 by treating commissions that represent a volume measure for the cedent’s risk exposure as equivalent to premiums that increase standard formula premium risk, and further detailing the treatment of fixed and variable commissions. Stakeholders can respond via EIOPA’s online survey until 17 July 2026, with responses to be published on EIOPA’s website unless confidentiality is requested.
European Insurance and Occupational Pensions Authority 2026-04-15
European Insurance and Occupational Pensions Authority launches consultation on proportional reinsurance to align SCR relief with effective risk transfer
The European Insurance and Occupational Pensions Authority has launched a consultation on a draft Annex to its Opinion on risk mitigation techniques, focusing on proportional reinsurance treaties whose features may weaken the link between solvency capital requirement (SCR) relief and actual risk transfer. The draft sets out expectations for undertakings to test and, where appropriate, qualitatively assess whether risk transfer is commensurate with SCR relief, and to disallow recognition of risk-mitigating effects where this is not the case, while clarifying the treatment of reinsurance commissions.