Insurance Europe: FICOD must recognise Solvency II and avoid duplication

27 September 2016

Insurance Europe said that the purpose of the Financial Conglomerate Directive should be to ensure there are no gaps between sectoral legislation, and to avoid duplication and overlap with sectoral regulation, including guidelines issued by the European Supervisory Authorities.

Insurance Europe has provided detailed answers to most questions and its key general comments are: 

• Financial conglomerate directive (FICOD) was implemented before Solvency II was in place and it represented significant improvements over SI which was an entity level rather than group level directive. Solvency II has been designed to apply at both entity level and group level. Solvency II requires that the ultimate parent is identified including whether this would be an insurance or reinsurance undertaking, insurance holding company or mixed financial holding company and sets group level most, if not all of FICOD’s risk management and reporting requirements at that level. Therefore, FICOD should be updated to recognise Solvency II and avoid duplication of requirements already covered under Solvency II. 
• Due to lack of clarity on definitions and scope and/or supervisory discretion, currently insurance groups can be required to apply Solvency II, CRD4 and FICOD. This leads to significant unnecessary expense and effort and avoiding this should be a key aim of any changes to FICOD. Solvency II reporting should be the only group level requirement for insurance dominated financial conglomerates (hereafter “insurance groups”).
• Having a single supervisor act as a coordinator with a clear role should be an aim of any FICOD review. For example, all requests for group level information should be via this coordinator. 

Position paper

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