European Insurance and Occupational Pensions Authority publishes Solvency II advice endorsing small and non-complex insurer classification and setting conditions for wider proportionality relief

The European Insurance and Occupational Pensions Authority published technical advice requested by the European Commission on implementing the amended Solvency II Directive’s new proportionality framework. The advice endorses the Directive’s methodology for classifying insurance undertakings as small and non-complex undertakings (SNCUs) and sets out conditions for supervisors to apply similar proportionality measures to other (re)insurers that do not meet the SNCU criteria. Under the revised framework, eligible undertakings can benefit from reduced requirements, including in governance and quantitative areas, reflecting the nature, scale and complexity of their risks. For SNCUs, EIOPA considers the classification criteria clear and comprehensive and sees no need for further specification, with proportionality measures applying following a simplified notification process to supervisors. For non-SNCUs, the advice supports a supervisory regime that allows proportionality measures to be granted and withdrawn based on a combination of quantitative and qualitative conditions covering resilience to current and future risks, business model complexity, governance arrangements and balance sheet size, using both general risk-profile conditions and measure-specific criteria.