KPMG criticises Eiopa's dual reporting plans for insurers

The European Insurance and Occupational Pensions Authority (Eiopa) has released consultation papers on its proposed guidelines for regulators to implement Solvency II.

The trade body wants regulators to adopt the new model from 1 January next year.

But KPMG head of Solvency II Peter Ott said that the new depth of reporting required by Eiopa would hinder insurers.

He said: “While the areas covered by today’s release had already been highlighted by Eiopa in its December Opinion regarding interim measures, the surprise for many will be the depth of reporting proposed. There had already been significant push back from industry that Pillar 3 reporting [supervisory reporting and public disclosure] made little sense without the detailed valuation requirements of Pillar 1 [capital adequacy] being finalised.”

KPMG insurance director Janine Hawes also criticised the proposed reporting structure. She said: “For the UK insurance market, this could be especially burdensome, with Eiopa confirming that this interim reporting would apply in addition to any existing reporting obligations. The first submission would be the annual return for the year ended 31 December 2014, which it proposes be submitted within 20 weeks of the year-end (26 weeks for group information). 

“Unless the FSA removes its existing FSA returns, this will result in UK insurers having to work on both the FSA returns and this interim submission in parallel. 

“This will represent a significant administration burden on insurance firms/groups. Given the delays to Solvency II timetable, many companies had reduced the level of Solvency II preparation, with Pillar 3 reporting deferred by many insurance groups. These proposals will mean that they now need to reinvigorate their Pillar 3 projects.”

But PwC partner and global insurance regulatory leader Paul Clarke said: “The release of this consultation represents a positive step in the move towards Solvency II implementation. It is important that, despite a potential delay to the start date, momentum is not lost.

“The main focus for the guidelines is on Pillar 2 and 3 and there is recognition that at this stage these guidelines are not binding rules.  

“Aspects of the quarterly reporting could be a challenge for some. However given the need for this type of information by the European Central Bank, the inclusion within these guidelines was inevitable. The ability to use XBRL will help many insurers in their preparation for the ultimate start date.”