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06 February 2015

Commercial Risk Europe: Solvency II at risk from EIOPA budget cut

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EIOPA's budget cut could threaten the delivery of Solvency II and other regulatory projects. According to EIOPA's executive director, it will also challenge EIOPA's ability to ensure strong and consistent insurance supervision in Europe.

EIOPA's budget has been reduced by 7.6% (roughly €1.7m) compared with last year, to a figure around €19.9m. EIOPA said this represents a shortfall of €2.4m compared to the original proposal that EIOPA members approved.

The final 2015 budget was endorsed this week by EIOPA's Board of Supervisors following adoption by the European Budgetary Authority last December.

Each year, EIOPA sends a draft statement of estimates of revenue and expenditure for the following financial year to the European Commission. The Commission revises the proposed budget and presents it to the EU Budgetary Authority (the Council of the EU and the European Parliament).

EIOPA said that in response to these cuts and to ensure delivery of high quality work it has undertaken 'a severe strategy driven reprioritisation exercise'. This includes extensive reallocation of human resources and rationalisation of funds, but also, crucially, postponement and cancellation of ongoing projects.

One such project is Solvency II. EIOPA stressed that Solvency II will remain its highest priority in 2015. However, it said cuts will affect this project. For example, the Solvency II training programme for supervisors will be reduced by 20% and production of the IT supervisory toolkit related to XBRL (eXtensible Business Reporting Language) reporting has been cancelled.

In addition, certain work streams, including those in the areas of financial stability and consumer protection, have been 'deprioritised'. Investments in EIOPA's operational software, infrastructure and business efficiency processes will also be very limited, said the authority.

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