25.07.2016
Transparency and control

Pillar III: Reporting requirements under Solvency II

Solvency II is both a supervisory tool and an early warning system. To make it work, insurers have to report on their financial situation, risks and significant fields of business – not only to their supervisor, but also to the public. The reporting requirements are defined under Pillar III of Solvency II.

Regular, detailed reporting enables supervisors to monitor risks more accurately, thereby improving the stability of the insurance industry and the financial sector. Transparency for consumers and investors is also increased – for instance, companies have to report on their investment strategy and the remuneration of their managers. Moreover, the European harmonization of reporting requirements makes it easier to compare domestic and foreign insurance companies.

Supervisors receive ongoing information
Insurance companies and groups are using standardising reporting sheets to inform their supervisor about key figures and developments on a quarterly and annual basis. These electronic reporting sheets („Quantitative Reporting Templates“) include detailed information on the current development of the insurer’s financial and solvency situation, also with regards to solvency capital requirements. The supervisory authorities can analyse the submitted data at short notice. Since the data can be accessed and compared across borders, impending risks become visible throughout Europe.

The quarterly reporting requirement applies to smaller insurers, too. Due to the comparatively high implementation efforts of quarterly data collection, simplified calculation methods may be used. Under certain conditions, the national supervisor can also exempt smaller insurers from some of the quarterly reporting requirements.

Consumers have better access to information
In addition to quarterly data, insurers have to draw up other regular reports including key figures and data as well as qualitative assessments, e.g. on the current market situation, the situation of the insurer and internal developments, for instance regarding important staffing choices.

The Solvency and Financial Condition Report (SFCR) has to be submitted after the end of each financial year. It is relevant for customers, investors and the interested public and includes information on important economic results, significant events of the past financial year and the company’s current solvency situation. For the first time, extensive, standardised information on the risk situation of insurance companies is publicly available.

The “Regular Supervisory Report“ (RSR) is submitted to the supervisory authority alone. Since the SFCR follows a predefined structure and includes explanations e.g. on the business development, risk profile and the valuation of assets and liabilities. Unlike the SFCR, the RSR also includes information on the foreseeable future business development. It must be submitted to the supervisor on a regular basis, at least every three years. The reporting frequency is set by the supervisor and differs from company to company.

More:
>> Solvency II – Here is how it works