BETA

Activities of Henrike HAHN related to 2021/0295(COD)

Shadow reports (1)

2023/07/27
Committee: ECON
Dossiers: 2021/0295(COD)
Documents: PDF(518 KB) DOC(179 KB)
Authors: [{'name': 'Markus FERBER', 'mepid': 1917}]

Amendments (130)

Proposal for a directive
Recital 2

(2) The Covid-19 pandemic has caused tremendous socio-economic damage and left the EU economy in need of a sustainable, inclusive and fair recovery. Likewise, the economic and social consequences of the Russian war are still unfolding. This has made the work on the Union’s political priorities even more urgent, in particular ensuring that the economy works for people and attaining the objectives of the European Green Deal. The insurance and reinsurance sector can provide private sources of financing to European businesses and can make the economy more resilient by supplying protection against a wide range of risks. With this dual role, the sector has a great potential to contribute to the achievement of the Union’s priorities.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 3

(3) As underlined in the Commission’s Communication of 24 September 2020 ‘A Capital Markets Union for people and businesses’18 , incentivising institutional investors, in particular insurers, to make more long-term investments will be instrumental in supporting re-equitisation in the corporate sector and financing the green and digital transition. To facilitate insurers’ contribution to the financing of the economic recovery of the Union, the prudential framework should be adjusted to better take into account the long-term nature of the insurance business. In particular, when calculating the Solvency Capital Requirement under the standard formula, the possibility to use a more favourable standard parameter for equity investments which are held with a long- term perspective should be facilitated, provided that insurance and reinsurance undertakings comply with sound and robust criteria, that preserve policyholder protection and financial stability. Such criteria should aim to ensureshould be strictly conditioned to the long term nature of thate insur~~ance and reinsurance undertakings are able to avoid forced selling of equities intended to be held for the long term, including under stressed market condition~~er’s liabilities and to the ability of the insurer to properly manage its risks. __________________ 18 COM/2050/590 final

2022/08/01
Committee: ECON

Proposal for a directive
Recital 5

(5) The ~~EU sustainable finance framework~~Commission estimates that EUR 260 billion additional investments will be needed in the EU to reach the 2030 energy and climate target. The EU sustainable finance framework, and in particular the insurance sector, will play a key role in meeting the targets of the European Green Deal and environmental regulation should be complemented by a sustainable finance framework which channels finance to investments that reduce exposure to these climate and environmental risks. In its Communication of 6 July 2021 on a Strategy for Financing the Transition to a Sustainable Economy22 , the Commission committed to propose amendments to Directive 2009/138/EC to consistently integrate sustainability risks in risk management of insurers by requiring climate change scenario analysis by insurers. __________________ 22 COM(2021)390

2022/08/01
Committee: ECON

Proposal for a directive
Recital 5 a (new)

(5 a) According to the International Energy Agency, to reach the carbon neutrality objective by 2050, no new fossil fuel exploration and expansion can take place. This means that fossil fuel exposures represent a higher risk both at micro level, as the value of such assets is set to decrease over time, and at macro level as financing fossil fuel activities jeopardises the objective of maintaining the global rise of temperature below 1.5°C and therefore threatens the financial stability. The higher risks embedded in such exposure should be reflected in the prudential framework, as of now.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 10

(10) Directive 2009/138/EC should be applied in accordance with the proportionality principle. To facilitate the proportionate and homogeneous application of the Directive to undertakings presenting a lower risk profile than the average undertaking, and to ensure that they are not subject to disproportionately burdensome requirements, it is necessary to provide risk-based criteria that allow for their identification.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 15 a (new)

(15 a) The lack of diversity in the administrative, management or supervisory bodies could lead to 'groupthink' phenomenon. This phenomenon is at the roots of ineffective decisions and systematic bias. Therefore, diversity should be one of the criteria for the composition of administrative, management or supervisory bodies. To facilitate independent opinions and critical challenges, administrative, management or supervisory bodies should be sufficiently diverse as regards age, gender, geographical provenance and educational and professional background to present a variety of views and experiences. Gender balance is of particular importance to ensure adequate representation of the population. Insurance and reinsurance undertaking shall set target and define measures to increase the representation of the underrepresented gender in the administrative, management or supervisory body. Employee representation in management bodies could also, by adding a key perspective and genuine knowledge of the internal workings of institutions, be seen as a positive way of enhancing diversity. Diversity should also be addressed in institutions' recruitment policy more generally. Such a policy should, for instance, encourage institutions to select candidates from shortlists including both genders.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 15 b (new)

(15 b) The effectiveness of a prudential framework relies on the ability of the responsible supervisor to conduct its task in an objective and impartial manner. To avoid that any conflict of interest jeopardises the supervision of insurance and reinsurance undertakings, supervisors shall meet high-level independence criteria. Supervisors must not be allowed to trade any securities issued by a supervised entity and an appropriate cooling-off period shall be defined before a supervisor takes a position in a supervised entity or other related entity.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 17

(17) Supervisory authorities should be entitled to receive from each supervised insurance and reinsurance undertaking and their groups, at least every t~~hree~~wo years, a regular narrative report with information on the business and performance, system of governance, risk profile, capital management and other relevant information for solvency purposes. The reporting frequency for low-risk profile undertakings shall be three years. In order to simplify this reporting requirement for insurance and reinsurance groups, it should be possible, subject to certain conditions, to submit the information of the regular supervisory report relating to the group and its subsidiaries in an aggregated way for the whole group.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 21

(21) As insurance activities ~~may~~could trigger or amplify risks for financial stability, insurance and reinsurance undertakings should incorporate macroprudential considerations and analysis in their investment and risk management activities. This could include taking into account the potential behaviour of other market participants, macroeconomic risks, such as credit cycle downturns or reduced market liquidity, developments related to climate change, or excessive concentrations at market level in certain asset types, counterparties or sectors.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 26

(26) Directive 2009/138/EC requires insurance and reinsurance undertakings to have, as an integrated part of their business strategy, a periodic own-risk and solvency assessment. Some risks, such as climate change risks, are difficult to quantify or they materialise over a period that is longer than the one used for the calibration of the Solvency Capital Requirement. Those risks can be better taken into account in the own-risk and solvency assessment. Where insurance and reinsurance undertakings have material exposure to climate risks, theyInsurance and reinsurance undertakings should be required to carry out, within appropriate intervals and as part of the own-risk and solvency assessment, analyses of the impact of long-term climate change risk scenarios on their business. Such analyses should be proportionate to the nature, scale and complexity of the risks inherent in the business of the undertakings. In particular, while the assessment of the materiality of exposure to climate risks should be required from all insurance and reinsurance undertakings, long-term climate scenario analyses should not be required for low-risk profile undertakings.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 27

(27) Directive 2009/138/EC requires the disclosure, at least, annually, of essential information through the solvency and financial condition report. That report has two main types of addressees: policyholders and beneficiaries on the one hand, and analysts and other market participants on the other hand. In order to address the needs and the expectations of those two different groups, the content of the report should be divided into two parts. The first part, addressed mainly to policyholders and beneficiaries, should contain the key information on business, performance, capital management and risk profile, including in relation to sustainability risks. The second part, addressed to analysts and other market participants, should contain detailed information on the system of governance, including the role of the administrative, management and supervisory body with regard to sustainability risks, specific information on technical provisions and other liabilities, the solvency position ~~as well as other data relevant for specialised analysts~~, the targets and milestones defined in the transition plan as well as other data relevant for specialised analysts, including for undertakings using internal models, the amount of the Solvency Capital Requirements that would have resulted from the application of the standard formula.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 31

(31) The burden of the auditing requirement does not seem to be justified for low-risk profile undertakings, which are not expected to be relevant for the financial stability of the Union and whose policyholders are not numerous. One of the criteria that low-risk profile undertakings are required to meet is that they be small in size. To alleviate this burden, an exclusion from this requirement should be granted, unless decided otherwise by the competent authority.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 36

(36) Directive 2009/138/EC provides for a volatility adjustment, which seeks to mitigate the effect of exaggerations of bond spreads and is based on reference portfolios for the relevant currencies of insurance and reinsurance undertakings and, in the case of the euro, on reference portfolios for national insurance markets. The use of a uniform volatility adjustment for entire currencies or countries can lead to benefits in excess of a mitigation of exaggerated bond spreads, in particular where the sensitivity of relevant assets of those undertakings to changes in credit spreads is lower than the sensitivity of the relevant best estimate to changes in interest rates. In order to avoid such excessive benefits from the volatility adjustment, the volatility adjustment should be subject to supervisory approval and its calculation should take into account undertaking- specific characteristics related to the spread sensitivity of assets and the interest rate sensitivity of the best estimate of technical provisions. In particular, the long-term nature of insurance and reinsurance undertakings' balance sheets should be better integrated in the volatility adjustment by introducing a factor reflecting the illiquidity of the insurance or reinsurance undertaking's liabilities. In light of the additional safeguards, insurance and reinsurance undertakings should be allowed to add up to an increased proportion of 85% of the risk- corrected spread derived from the representative portfolios to the basic risk- free interest rate term structure.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 41

(41) The existing limits imposed on the level of the symmetric adjustment restrict the ability of this adjustment to mitigate potential pro-cyclical effects of the financial system and to avoid a situation in which insurance and reinsurance undertakings are unduly forced to raise additional capital or sell their investments as a result of unsustained adverse movements in financial markets, such as the ones triggered by the Covid-19 pandemic. Therefore, the symmetric adjustment should be amended so that it allows for larger changes to the standard equity capital charge and further mitigates the impact of sharp increases or decreases in stock markets. To prevent an overshooting of the symmetric adjustment, the final capital charge should not be lower than the one which would have resulted from the application of an instantaneous decrease equal to 15% in the value of the equity investment.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 44

(44) As part of the supervisory review process, it is important for supervisory authorities to be able to compare information across the companies they supervise. ~~Partial and full internal models allow to capture the individual risk of a company better and~~ Directive 2009/138/EC allows insurance and reinsurance undertakings to use ~~them~~partial or full internal models for determining capital requirements without limitations stemming from the standard formula. However, partial and full internal models make comparisons across companies more difficult and supervisory authorities would therefore benefit from access to the outcome of the calculation of standard formula capital requirements. All insurance and reinsurance undertakings should therefore regularly report such information to their supervisors. In case of a significant difference between the calculation of capital requirements by the standard formula and by the internal model, the insurance or reinsurance undertaking shall provide additional information and justification to its supervisory authority.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 63

(63) Group supervisors may decide to exclude an undertaking from group supervision, in particular when such an undertaking is deemed of negligible interest with respect to the objectives of group supervision. EIOPA has noted diverging interpretations on the criterion of negligible interest, and has identified that, in some cases, such exclusions result in complete waivers of group supervision or in supervision at the level of an intermediate parent company. It is therefore necessary to clarify that such cases should only occur in very exceptional circumstances and that group supervisors should consult EIOPA before making such decisions. Criteria should also be introduced so that there is more clarity as to what should be deemed as negligible interest with respect to the objectives of group supervision. EIOPA shall issue guidelines to further specify such exceptional circumstances and the cases where an exclusion may be justified. The group supervisor shall reassess at least annually whether its decision remains appropriate.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 78

(78) Achieving the environmental and climate ambitions of the Green Deal requires the channelling of large amounts of investments from the private sector, including from insurance and reinsurance companies, towards sustainable investments. The provisions of Directive 2009/138/EC on the capital requirements should not impede sustainable investments by insurance and reinsurance undertakings but should reflect the full risk of investments in environmentally harmful activities. While there is not sufficient evidence at this stage on risk differentials between environmentally or socially harmful and other investments, such evidence may become available over the next years. In order to ensure an appropriate assessment of the relevant evidence, EIOPA should monitor and report by June 2023 on the evidence on the risk profile of environmentally or socially harmful investments. The report should assess whether a dedicated prudential treatment of exposures related to assets or insurance liabilities associated substantially with environmental or social objectives would be justified. Where appropriate, EIOPA’s report should advise on changes to Directive 2009/138/EC and to the delegated and implementing acts adopted pursuant to that Directive. EIOPA may also inquire whether it would be appropriate that certain environmental risks, other than climate change, including biodiversity loss-related, should be taken into account and how. For instance, if evidence so suggests, EIOPA could analyse the need for extending scenario analyses as introduced by this Directive in the context of climate change-related risks to other environmental risks. Prior to the publication of such a report, undertakings’ assessment of market risk should already reflect sustainability risks stemming from climate change. The assessment should include the impact of such risk on the undertaking, its customers and on the assets the undertaking has invested in. To that end, undertakings should consider any exposure to fossil fuel sectors as an exposure to the most volatile asset of each category.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 78 a (new)

(78 a) With the aim of achieving climate neutrality by 2050 at the latest and in line with the broader transition towards a sustainable economy, insurance and reinsurance undertakings should draw up transition plans, including a comprehensive strategy and operational actions to reach the carbon neutrality objective by 2050 as well as science-based and quantifiable targets and milestones to monitor and address risks arising the short, medium and long-term. Supervisory authorities should approve such transition plans and verify that the investment policy of insurance and reinsurance undertakings is aligned with the objectives and targets set out in these plans.

2022/08/01
Committee: ECON

Proposal for a directive
Recital 78 b (new)

(78 b) Remuneration policies which encourage excessive risk-taking behaviour can endanger sound and effective risk management. Therefore, Member States should ensure that written policies on remuneration promote sound and effective risk management, including in relation to sustainability risks. The Commission should adopt delegated acts to specify remuneration schemes, including variable remuneration components linked to the achievement of targets set out in the transition plan of the undertaking.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 2

Directive 2009/138/EC
Article 4 – paragraph 1 – point c

(c) where the undertaking belongs to a group, the total of the technical provisions of the group defined as gross of the amounts recoverable from reinsurance contracts and special purpose vehicles does not exceed EUR ~~25 million; (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~50 000 000; Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 2 a (new)

Directive 2009/138/EC
Article 4 – paragraph 4 – subparagraph 1 – introductory part

This Directive shall cease to apply to those insurance undertakings for which the supervisory authority has verified that all of the following conditions are met: (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)(2a) in Article 14(4), the first subparagraph is amended as follows: "Unless decided otherwise by the supervisory authority, this Directive shall cease to apply to those insurance undertakings for which all of the following conditions are met: " Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 5 – point c a (new)

Directive 2009/138/EC
Article 13 – paragraph 1 – point 17

(c b) Article 13(17) is replaced by the following: "‘close links’ means a situation in which two or more natural or legal persons are linked by ~~control or participation, or a situation in which~~: (a) participation in the form of ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking; (b) ‘control’ which means the relationship between a parent undertaking and a subsidiary, in all the cases referred two ~~or more natural or legal persons are~~in Article 22(1) and (2) of Directive 2013/34/EU, or a similar relationship between any natural or legal person and an undertaking, any subsidiary undertaking of a subsidiary undertaking also being considered to be a subsidiary of the parent undertaking which is at the head of those undertakings; (c) a permanently link~~ed to one and~~ of both or all of them to the same person by a control relationship; ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~" Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 5 – point h a (new)

Directive 2009/138/EC
Article 13 – paragraph 1 – point 36 a (new)

(ha) the following point is inserted: ‘(36a) ‘climate change risk’ means the risk of any financial negative impact on the undertaking stemming from the current or prospective impacts of climate change factors, including factors related to the climate change mitigation or climate change adaptation objectives;’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 5 – point i

Directive 2009/138/EC
Article 13 – paragraph 1 – point 41 a (new)

(41a) ‘fossil fuel sectors’ means sectors of the economy which produce, process, store or use fossil fuels as defined in Article 2(62) of Regulation EU 2018/1999 of the European Parliament and the Council;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 5 – point i

Directive 2009/138/EC
Article 13 – paragraph 1 – point 41 b (new)

(41b) ‘crypto-assets’ means an asset- reference token, an e-money token or other crypto-asset as defined in [insert reference to MICA regulation];

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 6

Directive 2009/138/EC
Article 18 – paragraph 1 – point i a (new)

(i a) to show evidence that it will not be significantly exposed to money laundering and terrorist financing risks;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 6

Directive 2009/138/EC
Article 18 – paragraph 1 – subparagraph 1 a (new)

For the purpose of assessing the criterion referred to in point (i a) (new) of this paragraph, supervisory authorities shall consult the authorities competent for the supervision of the undertakings in line with Directive (EU) 2015/849.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 9

Directive 2009/138/EC
Article 25 – paragraph 3 a (new) and 3 b (new)

Supervisory authorities shall refuse authorisation of the insurance or reinsurance undertaking at least where there are reasonable grounds to suspect that: a) the management body of the applicant insurance or reinsurance undertaking poses a threat toits effective, sound and prudent management and business continuity, and to the adequate consideration of the interest of policyholders and the integrity of the market, or exposes the insurance or reinsurance undertaking to a serious risk of money laundering or terrorism financing; b) the applicant is likely to fail to meet any requirements of this Directive; c) the authorisation of an undertaking would lead to money laundering of terrorist financing activities For the purpose of assessing the aspects related to money laundering or terrorism financing risks referred to in points a) and c) of the previous paragraph, supervisory authorities shall consult competent authorities for AML/CFT supervision as defined in [insert reference to AMLD]. An objection in writing by the authorities competent for the supervision of the obliged entities in accordance with[insert reference to AMLD] shall constitute reasonable grounds for refusal.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – introductory part

1. Member States shall ensure that insurance and reinsurance undertakings are classified as low-risk profile undertakings, according to the process set out in Article 29b, where, for two consecutive financial years prior to such classification, they meet all the following criteria:

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point a – subparagraph 1 – point iv

(iv) investments in non-traditional investments do not represent more than 210% of total investments;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point a – subpargraph 1 – point v a

(v a) the Solvency Capital Requirement is complied with and a capital add-on has not been set;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subpargraph 1 – point a – subparagraph 1 – point v b

(v b) the insurance or reinsurance undertaking has not been convicted or been under investigations for committing or permitting money laundering or terrorist financing activities as defined in [insert reference to AMLD].

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point b – subparagraph 1 – point v

(v) investments in non-traditional investments do not represent more than 210% of total investments;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paregraph 1 – subparagraph 1 – point b – subparagraph 1 – point vi a (new)

(vi a) the Solvency Capital Requirement is complied with and a capital add-on has not been set;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point b – subparagraph 1 – point vi b (new)

(vi b) the insurance or reinsurance undertaking has not been convicted or been under investigations for committing or permitting money laundering or terrorist financing activities as defined in [insert reference to AMLD].

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point c – subparagraph 1 – point vii

(vii) investments in non-traditional investments do not represent more than 210% of total investments;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point c – subparagraph 1 – point viii a (new)

(viii a) the Solvency Capital Requirement is complied with and a capital add-on has not been set;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29a – paragraph 1 – subparagraph 1 – point c – subparagraph 1 – point viii b (new)

(viii b) the insurance or reinsurance undertaking has not been convicted or been under investigations for committing or permitting money laundering or terrorist financing activities as defined in [insert reference to AMLD].

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29b – paragraph 3

3. The supervisory authority may oppose the classification as low-risk profile undertaking within one month of receipt of the notification referred to in paragraph 1 of this Article ~~on grounds related exclusively to the non-compliance with the conditions foreseen under Article 29a~~. A decision of the supervisory authority to oppose to the classification shall be done in writing and state the reasons of the supervisory authority’s disagreement. Absent such decision, the insurance undertaking shall be classified as low-risk profile undertaking as of the end of the one month opposition period or an earlier date where the supervisory authority has issued a decision earlier confirming compliance with criteria.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29b – paragraph 5 – subparagraphs 1 a (new) and 1 b (new)

When a low-risk profile undertaking no longer holds sufficient eligible own funds to cover the Solvency Capital Requirement, it shall cease to be classified as low-risk profile undertaking immediately. When a low-risk profile undertaking no longer holds sufficient eligible own funds to cover the Solvency Capital Requirement without the use of transitory measures, it shall cease to be classified as low-risk profile undertaking immediately.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29c – paragraph 2

2. Where the supervisory authority has serious concerns in relation to the risk profile of a low-risk profile undertaking, the supervisory authority may~~, in exceptional circumstances,~~ request the undertaking concerned to refrain from using one or several proportionality measures listed in paragraph 1 provided this is justified in writing on consideration of the impact on the organisation of the undertaking and the specificities or change of its risk profile.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29d – paragraph 2

2. The supervisory authority shall, within twohree months of receipt, assess the request and inform the undertaking of its approval or rejection, as well as of the proportionality measures granted. Where the supervisory authority approves the use of proportionality measures under certain terms or conditions, the approval decision shall contain the reasons for those terms and conditions. A decision of the supervisory authority to oppose the use of one or several proportionality measures listed in the request submitted by the undertaking shall be done in writing, and state the reasons for the supervisory authority’s decision. Such reasons shall be linked to the risk profile of the undertaking,

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 13

Directive 2009/138/EC
Article 29d – paragraph 4

4. With respect to requests received by supervisory authorities within the first six months of [OP please insert date = date of application of this Directive], the period referred to in paragraph 2 shall be ~~four~~six months.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 14 a (new)

Directive 2009/138/EC
Article 30a (new)

(14 a) the following Article 30a is inserted: ‘Article 30a Supervisory independence and responsibilities 1. Member States shall ensure that supervisory authorities have the expertise, resources, operational capacity, powers and independence necessary to carry out the functions relating to prudential supervision, investigations and the enforcement measures set out in this Directive. 2. For the purposes of preserving the independence of supervisory authorities in the exercise of their powers, Member State shall provide all the necessary arrangements to ensure that those supervisory authorities, including their staff and members of their governance bodies, can act independently and objectively, without seeking or taking instructions, or being subject to influence from supervised undertakings, from any government of a Member State or body of the Union or from any other public or private body. These arrangements shall be without prejudice to the rights and obligations of the supervisory authorities as stemming from being part of the European system of financial supervision as provided in Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010. Member States shall, in particular, ensure that supervisory authorities have in place all the necessary arrangements to prevent conflicts of interests of their staff and members of their governance bodies. For those purposes, Member States shall lay down rules proportionate to the role and responsibilities of those staff and members of the governance bodies, and at a minimum prohibiting them from: (a) trading in financial instruments issued by or referenced to the undertakings supervised by the supervisory authorities, their direct or indirect parent undertakings, subsidiaries or affiliates; (b) following the end of their employment at the supervisory authority, being hired by or accepting any kind of contractual agreement for the provision of professional services with any of the following: (i) undertakings they have directly supervised, including their direct or indirect parent undertakings, subsidiaries or affiliates, over at least the two preceding years from the date when taking up any new role; (ii) undertakings that are direct competitors of institutions referred to in point (i), over at least 6 preceding months from the date when taking up any new role; (iii) firms that provide services to any of the undertakings referred to in point (i) that were directly supervised over at least the two preceding years from the date when taking up any new role, unless they are strictly precluded from taking part in any provision of those services while the prohibition referred to herein remains in force. Members of staff and of governance bodies subject to the prohibitions provided for in the second subparagraph, point (b), shall be entitled to an appropriate compensation for the inability to take up a prohibited role. Member States shall lay down appropriate rules, including regarding the access to confidential or sensitive data, for the staff and members of governance bodies for their resignation period when they plan to join one of the firms referred to in the second subparagraph, point (b). 3. Member States shall require staff and members of governance bodies to declare their financial interests prior to taking up any position in supervisory authorities. 4. Member States shall require staff and members of governance bodies to sit back for any supervisory activity or decision that might create a conflict of interest. Prior to the appointment of a staff member, supervisory authorities shall assess whether there may be a conflict of interests resulting from the candidate’s previous occupational activities or their close personal relationship to members of the Management Board of supervised undertakings. 5. The EIOPA shall issue guidelines addressed to the supervisory authorities, in accordance with Article 16 of Regulation (EU) No 1094/2010, on the prevention of conflicts of interests in and independence of competent authorities, taking into account international best practices, for the proportionate application of this Article.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 14 b (new)

Directive 2009/138/EC
Article 31 – paragraph 2 – point e a (new)

(14b) in Article 31(2) the following point is added: ‘(e a) the number of the supervisory authority staff members that left the supervisory authority to join an undertaking supervised by the authority;’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 14 c (new)

Directive 2009/138/EC
Article 31 – paragraph 2 – subparagraph 3

(14c) subparagraph 3 of Article 31(2) is replaced by the following: "The disclosure shall be made in a common format and be updated regularly. The information referred to in points (a) to (ea) (new) of the first subparagraph shall be accessible at a single electronic location in each Member State. ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~" Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 15

Directive 2009/138/EC
Article 33a – paragraph 1 – subparagraph 1

1. In the event of significant cross- border activities carried out by insurance and reinsurance undertakings under the right of establishment or the freedom to provide services, the supervisory authority of the home Member State shall cooperate with the supervisory authority of the host Member State to assess whether the insurance undertaking has a clear understanding and a sound management of the risks that it faces, or may face, in the host Member State.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 16 – point a

Directive 2009/138/EC
Article 35 – paragraph 1

Member States shall require insurance and reinsurance undertakings to submit to the supervisory authorities the information which is necessary for the purposes of supervision, taking into account the objectives of supervision laid down in Articles 27 and 28 and the general principles of supervision laid down in Article 29. Insurance and reinsurance undertakings shall also submit to their supervisory authorities the transition plan referred to in Article 44a.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 16 – point b

Directive 2009/138/EC
Article 35 – paragraph 5a – subparagraph 2 – point b

(b) at least every t~~hree~~wo years for insurance and reinsurance undertakings other than low-risk profile undertakings.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17

Directive 2009/138/EC
Article 35a – paragraph 1 – subparagraph 2

That limitation to regular supervisory reporting shall be granted only to undertakings that do not represent more than 210 % of a Member State’s life and non-life insurance and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17

Directive 2009/138/EC
Article 35a – paragraph 1 – subparagraph 3 a (new)

The limitation to regular supervisory reporting shall not apply to undertakings to which a capital add-on has been set.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 17

Directive 2009/138/EC
Article 35a – paragraph 2 – subparagraph 3

The exemption from reporting on an item- by-item basis shall be granted only to undertakings that do not represent more than 210 % of a Member State’s life and non-life insurance or reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions. When determining the eligibility of undertakings for those limitations or exemptions, supervisory authorities shall give priority to low-risk profile undertakings.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 20 – point a

Directive 2009/138/EC
Article 37 – paragraph 1 – point e a (new)

(e a) the supervisory authority concludes that one of the following is the case: - the insurance or reinsurance undertaking is exposed to material sustainability risks that are not adequately monitored, managed and mitigated; - the insurance or reinsurance undertaking is not complying with the targets and milestones established in its transitional plans referred to in Article 44a.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 20 a (new)

Directive 2009/138/EC
Article 40 – paragraphs 1 a (new) and 2 a (new)

(20 a) The following sub-paragraphs are added to Article 40: ‘Insurance and reinsurance undertakings shall ensure that members of the administrative, management and supervisory body are at all times of good repute and possess collectively sufficient knowledge, skills and experience to perform their duties. Members of the administrative, management and supervisory body shall not have been convicted of offences relating to money laundering or terrorist financing or other offences that would question their good repute.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 21 – point c

Directive 2009/138/EC
Article 41 – paragraph 3 – subparagraph 1

3. Insurance and reinsurance undertakings shall have written policies in relation to at least risk management, internal control, internal audit, stewardship, remuneration and, where relevant, outsourcing. They shall ensure that those policies are implemented. The remuneration policy and its operational implementation shall address gender inequality.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 21 – point c

Directive 2009/138/EC
Article 41 – paragraph 3 – subparagraph 2

Those written policies shall be reviewed at least annually and include a report of the impact of the stewardship policy of the previous year. They shall be subject to prior approval by the administrative, management or supervisory body and be adapted in view of any significant change in the system or area concerned. Low-risk profile undertakings may perform a less frequent review, at least every three years, unless the supervisory authority concludes, based on the specific circumstances of that undertaking, that a more frequent review is needed.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 21 – point c a (new)

Directive 2009/138/EC
Article 41 – paragraph 3 a (new)

3a. The administrative, management or supervisory body shall be directly responsible for the sustainability risk management system described under Article 44(3a), including the successful implementation of the transition plan described under Article 44a.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 21 – point c a (new)

Directive 2009/138/EC
Article 41 – paragraph 5 a (new)

(ca) the following paragraph is added: ‘5a. Competent authorities shall require insurance and reinsurance undertakings to ensure that a sufficiently broad set of qualities, competences, experiences and backgrounds are present in the administrative, management or supervisory body. To that purpose, insurance and reinsurance undertakings shall put in place a policy promoting diversity in the administrative, management or supervisory body, including setting a target for the minimum representation of the underrepresented gender. This policy shall also include concrete measures to increase the representation of any underrepresented gender in the administrative, management or supervisory body. The target, policy and its implementation shall be made public, including in the Solvency and Financial Condition Report.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point - a (new)

Directive 2009/138/EC
Article 42 – paragraph 1 – point a

(-a) paragraph 1, point (a) is replaced by the following: "(a) their professional qualifications, knowledge and experience, includingin the field of sustainability risks, are adequate to enable sound and prudent management (fit); and ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~" Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 22 – point -a a (new)

Directive 2009/138/EC
Article 42 – paragraph 1 – subparagraph 1 a (new)

~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~(-aa) in paragraph 1, the following subparagraph is added: 'In particular, they shall not have been convicted of offences relating to money laundering or terrorist financing or other offences that would affect their good repute.' Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 – point b – point i – indent 2

Directive 2009/138/EC
Article 44 – paragraph 2a – subparagraph 1 – point b – point iii

~~— in point (b), point (iii) is~~ deleted;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 – point b – point i – indent 3

Directive 2009/138/EC
Article 44 – paragraph 2a – subparagraph 1 – point c

(c) where the volatility adjustment referred to in Article 77d is applied, the sensitivity of their technical provisions and eligible own funds to changes in the economic conditions that would affect the risk corrected spread referred to in Article 77d(3) and the impact of a reduction of the volatility adjustment to zero.’;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 – point b a (new)

Directive 2009/138/EC
Article 44 – paragraph 3 a (new)

(ba) the following paragraph is inserted: "3a. The risk management system shall cover the sustainability risks to which the insurance or reinsurance undertaking is exposed within the areas set out in paragraph 2 and shall consider the principal adverse impacts of the insurance or reinsurance undertaking, including the principal adverse impacts of the companies and activities for which the undertaking provides finance or underwriting services within its asset portfolio and insurance portfolio, on sustainability factor."

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 a (new)

Directive 2009/138/EC
Article 44 a (new)

(23a) the following Article is inserted: ‘Article 44a Transition plan 1. Member States shall ensure that the administrative, management or supervisory body approves specific plans and science-based quantifiable targets to monitor and address the risks arising in the short, medium and long-term from the misalignment of the business model, strategy and activities of the insurance or reinsurance undertaking, with the relevant Union policy objectives, including the objectives to: i) achieve climate neutrality by 2050 at the latest, as set out in Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021, or broader transition trends towards a sustainable economy in relation to environmental, social and governance factors; ii) halt biodiversity loss, by achieving the goals of the UN Convention of Biological Diversity, and to align with the restoration objectives of the [nature restoration law 2022/0195 (COD)] . The targets and measures included in the transition plans shall take into account the latest reports and measures prescribed by the European Scientific Advisory Board on Climate Change. The plans referred to in the first sub- paragraph shall at least include all the following elements: (i) A comprehensive strategy and operational actions to reach the objectives of the climate law [Regulation (EU) 2021/1119] and restore biodiversity; (ii) Specific, science-based intermediate quantifiable targets and milestones with horizons of 5 and 10 years. 2. The transition plans shall adopt a holistic approach and cover all insurance activities, including investment and underwriting activities. 3. The transition plans shall be regularly updated, and at least every three years, and be adapted in view of any significant changes affecting the transition plan or its implementation. 4. The transition plan shall be integrated into the risk management system required under Article 44, and particularly by identifying, measuring, monitoring, managing and reporting matters that pose a risk to the successful implementation of the transition plan.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 23 b (new)

Directive 2009/138/EC
Article 44 b (new)

(23b) the following article is inserted: ‘Article 44b Remuneration policy 1. Member States shall ensure that the written policy on remuneration, including incentive schemes, shall promote sound and effective risk management, including in relation to the integration of sustainability risks in the risk management system and the adverse impacts of the insurance or reinsurance undertaking considering sustainability factors. 2. The Commission shall adopt delegated acts in accordance with Article 301a to specify that remuneration schemes that include both fixed and variable components, the variable remuneration component shall be linked to achievement of the targets set as part of the transition plan of the undertaking, implemented in accordance with Article 44a.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 24 – point b a (new)

Directive 2009/138/EC
Article 45 – paragraph 2

(ba) paragraph 2 is replaced by the following: "2. For the purposes of paragraph 1(a), the undertaking concerned shall have in place processes which are proportionate to the nature, scale and complexity of the risks inherent in its business and which enable it to properly identify and assess the risks it faces in the short, medium and long term and to which it is or could be exposed, including sustainability risks. The undertaking shall demonstrate the methods used in that assessment. ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~" Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 1

1. For the purposes of the identification and assessment of risks referred to in Article 45(2), ~~the undertaking concerned shall also assess whether it has any material exposure to climate change risks. Th~~insurance and reinsurance undertakings shall ~~demonstrate the materiality of its exposure to climate change risks in the assessment referred to in Article 45(1)~~also assess their exposure to climate change risks.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 2 – introductory part

2. ~~Where the undertaking concerned has material exposure to climate change risks~~For the purpose of paragraph 1, the undertaking shall specify at least twohree long-term climate change scenarios, modelling a period of at least 30 years, including the following:

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 2 – point a

(a) a ~~long-term climate change scenario where~~n orderly transition scenario where climate policies are introduced early and become gradually more stringent, resulting in global greenhouse gas emissions reaching net-zero around 2050 the latest and the global temperature increase remains below two degrees Celsius;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 2 – point a a (new)

(a a) a ‘disorderly transition’ scenario where climate policies are delayed or divergent, resulting in later and sharper global greenhouse gas emissions reductions and the global temperature increase remaining below two degrees Celsius;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 2 – point b

(b) a ~~long-term climate change scenario~~“hot house world” scenario where no or insufficient climate policies are implemented and where the global temperature increase is equal to or higher than twohree degrees Celsius.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25

Directive 2009/138/EC
Article 45a – paragraph 5

5. By way of derogation from paragraph~~s 2, 3 and~~ 4, insurance and reinsurance undertakings that are classified as low-risk profile undertakings ~~shall neither~~can be required to ~~specify climate change scenarios nor to assess their impact on the business of the undertaking~~run only scenarios a) and c) referred to in paragraph 2. By way of derogation from paragraph 3, low risk profile undertakings can be allowed to conduct climate change scenario analysis on less frequent intervals, but no longer than five years.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 25 a (new)

Directive 2009/138/EC
Article 50 – paragraph 1

(25a) Article 50, paragraph 1 is amended as follows: a) the following point is added: ‘c) minimum standards and reference methodologies for transition plans referred to in Article 44a;’ b) the following sub-paragraph is added: ‘For the adoption of the delegated acts referred to in point c) of this paragraph, the Commission shall take into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG).’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point b

Directive 2009/138/EC
Article 51 – paragraph 1a – point b

(b) a brief description of the capital management and the risk profile of the undertaking, including in relation to sustainability risks.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point c

Directive 2009/138/EC
Article 51 – paragraph 1b – point c

(a) a description of the system of governance, including the role of the administrative, management and supervisory body with regard to sustainability risks;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point c

Directive 2009/138/EC
Article 51 – paragraph 1b – point c – point ii a (new)

(ii a) for undertakings using internal models, the amount of the Solvency Capital Requirement that would have resulted from the application of the standard formula;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point c

Directive 2009/138/EC
Article 51 – paragraph 1b – point c – point vi a (new)

(vi a) the targets and milestones defined in the undertaking’s transition plan;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point c

Directive 2009/138/EC
Article 51 – paragraph 1b – point c – point vi b (new)

(vi b) the adaptation of business model and strategy decided by the undertaking to cope with the sustainability risks it faces.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 26 – point c

Directive 2009/138/EC
Article 51 – paragraph 1b – point c a (new)

(c a) the result of the latest Union-wide assessment of the resilience of financial institutions.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 27

Directive 2009/138/EC
Article 51a – paragraph 1

1. ~~For i~~Insurance and reinsurance undertakings ~~other than low-risk profile undertakings and captive insurance undertakings and captive reinsurance undertakings,~~shall subject the balance sheet disclosed as part of the solvency and financial condition report or as part of the single solvency and financial condition report ~~shall be subject~~ to an audit.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 27

Directive 2009/138/EC
Article 51a – paragraph 2

2. ~~Member States may extend the obligation laid down in paragraph 1 to~~Unless decided otherwise by the competent authority, low-risk profile undertakings, captive insurance undertakings and captive reinsurance undertakings are exempted from the obligation laid down in paragraph 1.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 31 a (new)

Directive 2009/138/EC
Article 59 – paragraph 1 – subparagraph 1 a (new) and paragraph 2 – subparagraps 1 a (new) and 1 b (new)

(31a) Article 59 is amended as follows: a) the following subparagraph is added to paragraph 1: ‘For the purposes of assessing the criterion laid down in point (e), supervisory authorities shall consult the authorities competent for the supervision of the obliged entities in accordance with Directive (EU) 2015/849.’ b) the followings subparagraphs are added to paragraph 2: 'For the purpose of this paragraph and with regard to the criterion laid down in point (e) of paragraph 1 of this Article, an objection in writing by the authorities competent for the supervision of the obliged entities in accordance with Directive (EU) 2015/849 shall constitute reasonable grounds for opposition. In any event, competent authorities shall be able to object to the acquisition when the proposed acquirer is located in a country on the EU list of third-countries with strategic deficiencies or compliance weaknesses in their AML/CFT regime or in a country subject to EU restrictive measures.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 34 a (new)

Directive 2009/138/EC
Article 64 – paragraph 3 a (new)

(34a) in Article 64, the following paragraph is added: 'Paragraphs 1 to 3 of this Article shall not prevent the competent authorities from publishing the outcome of stress tests carried out in accordance with Article 34(4) of this Directive or Article 32 of Regulation (EU) No 1094/2010 or from transmitting the outcome of stress tests to EIOPA for the purpose of the publication by EIOPA of the results of Union-wide stress tests.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 36

Directive 2009/138/EC
Article 77 – paragraph 5 – subparagraph 3 a (new)

The calibration of the cost-of-capital rate to be used in accordance with previous sub-paragraphs, shall be based on empirical evidence, including market data covering a sufficiently long period. The Commission shall set the cost-of-capital to be used, based on an EIOPA opinion.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 37

Directive 2009/138/EC
Article 77a – paragraph 2 – subparagaph 1

2. For the purpose of paragraph 1, second subparagraph, any parameters determining the speed of the convergence of the forward rates towards the ultimate forward rate of the extrapolation may be chosen such that on [OP please insert date = application date] the risk-free interest rate term structure is sufficiently similar to the risk-free interest rate term structure on that date determined in line with the rules for the extrapolation applicable on [OP please insert date = one day before date of application]. Those parameters of the extrapolation shall be decreased linearly at the beginning of each calendar year, during a transitional period. The parameters determining the speed of convergence of the forward rates towards the ultimate forward rate shall take into account the level of the interest rates at the first smoothing point. The final parameters of the extrapolation shall be applied as of 1 January 20320.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 37 a (new)

Directive 2009/138/EC
Article 77b – paragraph 1 – subparagraph 1 – point a a (new)

(37a) in subparagraph 1 of Article 77b(1) the following point is inserted: '(aa) the portfolio of assets assigned to cover the best estimate of the portfolio of insurance or reinsurance obligations does not include assets with exposure to the fossil sectors nor crypto-assets;'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 38 – point a

Directive 2009/138/EC
Article 77d – paragraph 1

1. ASubject to prior approval by the supervisory authorities, an insurance and reinsurance undertaking may apply a volatility adjustment to the relevant risk- free interest rate term structure to calculate the best estimate referred to in Article 77(2) ~~subject to prior approval by the supervisory authorities where~~where at least all of the following conditions are met:

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 38 – point c

Directive 2009/138/EC
Article 77d – paragraph 3

3. The amount of the volatility adjustment to risk-free interest rates for a currecny shall be calculated as follows: 𝑉𝐴𝑐𝑢 = 85% ∙ 𝐶𝑆𝑆𝑅𝐶𝑈 ∙ 𝑅𝐶𝑆𝐶𝑈 𝑉𝐴𝑐𝑢 = 85% ∙ 𝐶𝑆𝑆𝑅𝐶𝑈 ∙ 𝑅𝐶𝑆𝐶𝑈 ∙ 𝑨𝑳𝒊 Where: cu (a) VA is the volatility adjustment for a cu currency cu; cu (b) CSSR is the credit spread sensitivity cu ratio of an insurance or reinsurance undertaking for the currency cu; (c) RCS is the risk-corrected spread for cu (c) RCS is the risk-corrected spread for cu the currency cu. the currency cu; (d) 𝑨𝑳𝒊 is the factor reflecting the illiquidity of undertaking i. CSSR shall not be negative and not be cu cu higher than one. It shall take values lower than one where the sensitivity of the assets of an insurance or reinsurance undertaking in a currency to changes in credit spreads is lower than the sensitivity of the technical provisions of that undertaking in that currency to changes in interest rates. RSC shall be calculated as the difference cu cu between the spread referred to in paragraph 2 and the portion of that spread that is attributable to a realistic assessment of expected losses or unexpected credit or other risk of the assets. VA shall apply to the relevant risk-free cu cu interest rates of the term structure that are not derived by means of extrapolation in accordance with Article 77a. Where the extrapolated part of the relevant risk-free interest rates takes into account information from financial instruments other than bonds pursuant to Article 77a(1), VA shall also apply to risk-free cu cu interest rates derived from those financial instruments. The extrapolation of the relevant risk-free interest rate term structure shall be based on those adjusted risk-free interest rates. ALi shall be calculated as the share of the undertaking’s illiquid liabilities based on stressed cash flows. The liability cash flows before and after pre-defined stresses define a share of liabilities that is predictable. The Commission may adopt delegated acts in accordance with Article 301a laying down the conditions and parameters of the stress to be applied to the undertaking cash flows to determine the illiquidity nature of the undertkaing’s liabilities.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 39 a (new)

Directive 2009/138/EC
Article 78 – point 3 a (new)

(39a) in Article 78 the following point is added: ‘(43a) quantitative and qualitative estimates of risk of loss or of adverse change in the values of insurance and reinsurance liabilities, resulting from inadequate pricing and provisioning assumptions due to internal or external factors, including sustainability risks;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 43 a (new)

Directive 2009/138/EC
Article 105 – paragraph 5 – subparagraph 1 a (new)

(43a) in paragraph 5 of Article 105 the following subparagraph is inserted: ‘The market risk shall also reflect the sustainability risks stemming from climate change. It shall include the impact of such risk on the undertaking, its customers and on the assets the undertaking has invested in. Climate- related risk shall include both physical and transition risks.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 43 b (new)

Directive 2009/138/EC
Article 105 – paragraph 5 – subparagraph 2 a (new)

(43b) in paragraph 5 of Article 105 the following subparagraph is added: ‘For the purpose of calculating the sensitivity of the values of assets referred to in points b) and d), the undertaking shall consider any exposure to fossil fuel sectors as an exposure to the most volatile asset of each category.’

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 43 b (new)

Directive 2009/138/EC
Article 105 – paragraph 6 a (new)

(43b) in Article 105 the following paragraph is added: '6a. The Commission is empowered to adopt a Delegated Act, in accordance with Article 301a, to reflect the risk posed by crypto-assets in the market risk sub module referred to in paragraph 5 and in the counterparty risk sub-module referred to in paragraph 6.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 44

Directive 2009/138/EC
Article 106 – paragraph 3 a (new)

3a. The final capital charge resulting from the application of the symmetric adjustment should not lead to a capital charge lower than the one which would have resulted from the application of an instantaneous decrease equal to 20% in the value of the equity investment.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 46 – point a

Directive 2009/138/EC
Article 111 – paragraph 1 – point m

(m) the approach to be used with respect to qualifying holdings within the meaning of Article 13(21) in the calculation of the Solvency Capital Requirement, in particular the calculation of the equity risk sub-module referred to in Article 105(5), taking into account the ~~likely reduction in the volatility of the value~~higher risks posed by holding equities of entities located in countries ofn th~~ose qualifying holdings arising from~~ e EU list of third-countries withe strategic ~~nature of those investments and the influence exercised by the insurance or reinsurance undertaking on those investe~~deficiencies or compliance weaknesses in their AML/CFT regime or in a country subject to EU restrictive measures or in a country on the list of non-cooperative countries for tax purposes;;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 46 – point b

Directive 2009/138/EC
Article 111 – paragraph 1 – subparagraph 1 a (new)

Where the Commission adopts delegated acts pursuant to point (c) of the first subparagraph to specify the methods, assumptions and standard parameters to be used for calculating the basic Solvency Capital Requirements, including the interest rates risk sub-module, it shall take duly into account the economic, financial and market environment and ensure that the assumptions used are robust and realistic.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 47

Directive 2009/138/EC
Article 112 – paragraph 7 a (new)

7a. Where the Solvency Capital Requirements resulting from the application of an internal model is 25% lower than the one that would have been determined by the application of the standard formula, the insurance or reinsurance undertaking shall provide a detailed and empirical based justification of this difference. Where the supervisory authority is not convinced by the justification provided by the insurance or reinsurance undertaking it may set a capital add-on, in accordance with Article 37.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 49 – point -a (new)

Directive 2009/138/EC
Article 132 – paragraph 1

(-a) paragraph 1 is replaced by the following: '1. Member States shall ensure that insurance and reinsurance undertakings invest all their assets in accordance with the prudent person principle, as specified in paragraphs 2, 2a (new), 2b (new), 3 and 4.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 49 – point -a a (new)

Directive 2009/138/EC
Article 132 – paragraph 2a and 2b (new)

(-aa) the following paragraphs are inserted: '2a. Insurance and reinsurance undertakings shall take into account the potential long-term impact of their investment strategy and decisions on sustainability factors. Insurance and reinsurance undertakings shall integrate their transition plan within their investment strategy and decisions. Where relevant, their investment strategy and decisions shall reflect the sustainability preferences of the undertaking’s customers taken into account in the product approval process as referred to in Article 4 of Commission Delegated Regulation (EU) 2017/2358. 2b. Insurance and reinsurance undertakings shall have a written policy defining how the undertaking spurs the strategy, business and operations of the entities in which it invests in order to ensure the alignment of these entities' strategy, business and operations with the climate neutrality objective as defined in Article 2(1) of the Regulation EU 2021/1119. Insurance and reinsurance undertakings shall disclose this written policy and review it at least every two years. '

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 49 – point b

Directive 2009/138/EC
Article 132 – paragraph 5

5. Member States shall ensure that insurance and reinsurance undertakings take account of possible macroeconomic and financial markets’ developments, including developments related to climate change, and, at the request of the supervisory authority, macroprudential concerns when they decide on their investment strategy.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 49 – point b

Directive 2009/138/EC
Article 132 – paragraph 6

6. Insurance and reinsurance undertakings shall assess the extent to which their investment strategy may affect macroeconomic and financial markets’ developments, including developments related to climate change and have the potential to turn into sources of systemic risk, and incorporate such considerations as part of their investment decisions.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 49 – point b

Directive 2009/138/EC
Article 132 – paragraph 7 a (new)

7a. Supervisory authorities shall verify that the investment policy of the insurance or reinsurance undertaking is aligned with the objectives and targets set in its transition plan in accordance with Article 44a (new).

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 51 – point a

Directive 2009/138/EC
Article 138 – paragraph 4 – subparagraph 1

In the event of exceptional adverse situations affecting insurance and reinsurance undertakings representing a significant share of the market or of the affected lines of business, as declared by EIOPA, the supervisory authority may extend, for affected undertakings, the period set out in paragraph 3, second subparagraph, by a maximum period of ~~seven~~three years, taking into account all relevant factors including the average duration of the technical provisions.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 52 a (new)

Directive 2009/138/EC
Article 144 – paragraph 1 – point c a (new) and subparagraph 1 a (new)

(52a) paragraph 1 of Article 144 is amended as follows: a) The following point is added: ‘ca) the undertaking has infringed the national law transposing Directive (EU) 2015/849 in respect of money laundering or terrorist financing'; b) the following subparagraph is inserted: ‘For the purpose of the criterion defined in point (ca) (new), supervisory authorities shall consult authorities competent for the supervision of the obliged entities in accordance with Directive (EU) 2015/849.'

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 54

Directive 2009/138/EC
Article 144b – paragraph 2 – subparagraph 2

The measures taken by supervisory authorities on the basis of this paragraph shall be reviewed at least once a year by the supervisory authority and be removed when the undertaking has taken effective remedies. Where relevant, the supervisory authority shall share the evidence of liquidity risk and vulnerabilities with the EIOPA.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 54

Directive 2009/138/EC
Article 144b – paragraph 3 – subparagraph 3

The application of the measure referred to in the first subparagraph shall last no more than three months. Member States shall ensure that the measure can be renewed if the underlying reasons that justify it are still present and it is no longer applied when those reasons are no longer present.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 54

Directive 2009/138/EC
Article 144b – paragraph 3 – subparagraph 6 a (new)

Where the EIOPA and the ESRB consider that the exercise of the power referred to in paragraph 3 by the competent authority is excessive, they shall issue an opinion and recommend the supervisory authority concerned to review its decision.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 54

Directive 2009/138/EC
Article 144c – paragraph 2 – subparagraph 1 – introductory part

2. During periods of exceptional sector-wide shocks, supervisory authorities shall have the power to require undertakings with a particularly vulnerable risk profile or especially vulnerable to an exceptional market-wide shock to take at least the following measures:

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 54

Directive 2009/138/EC
Article 144c – paragraph 3

3. The application of the measures referred to in paragraph 2 of this Article shall duly take into account the proportionality criteria referred to in Article 29(3)~~, and the existence of any preventively agreed risk tolerance limits and thresholds for internal capital planning~~. When applied only to one insurance or reinsurance undertaking or to only a subset of insurance or reinsurance undertakings, the supervisory authorities shall ensure that the application of such measure is not discriminatory.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 58

Directive 2009/138/EC
Article 152b – paragraph 5 a (new)

5a. In case the supervisory authorities concerned fail to reach a common view in the collaboration platform within a time limit established by EIOPA, EIOPA may, in accordance with Article 16 of Regulation (EU) No 1094/2010 issue a recommendation to the supervisory authority concerned.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 58

Directive 2009/138/EC
Article 152b – paragraph 5 b (new)

5b. Where the supervisory authority concerned does not comply with that recommendation within two months, it shall state the reasons including the steps it has taken or intends to take in order to address the concerns of the other supervisory authorities involved. EIOPA shall assess those steps and decide whether they are sufficient and appropriate. In case they are not deemed appropriate, EIOPA shall make its recommendation public, including the name of the undertaking(s) concerned, with those reasons and proposed steps.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 60

Directive 2009/138/EC
Article 159a – paragraph 3 – subparagraph 2

After the conclusion of the joint on-site inspection, the supervisory authorities concerned shall reach joint conclusions, including the recommended supervisory actions, within two months. The supervisory authority of the home Member State shall take into account such joint conclusions when deciding on the adequate supervisory responses.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 61 – point c

Directive 2009/138/EC
Article 212 – paragraph 3 – subparagraph 1 a (new)

Where the undertakings referred to in the first subparagraph do not have their head office in the same Member State, Member States shall ensure that only the national supervisory authority acting as group supervisor in accordance with Article 247 may conclude, after consulting other supervisory authorities concerned, that such undertakings form a group based on its opinion that those undertakings are managed on a unified basis.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 61 – point c

Directive 2009/138/EC
Article 212 – paragraph 5 – point c a (new)

(ca) evidence of coordinated and consistent strategies, operations or processes between two or more undertakings, including in relation to insurance distribution channels, insurance products or brands, communication or marketing.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 61 – point c

Directive 2009/138/EC
Article 212 – paragraph 6 – subparagraph 1 (new)

6. Where the group fails to designate a parent undertaking in accordance with paragraph 3, second subparagraph, the supervisory authorit~~ies shall~~y acting as group supervisor in accordance with Article 247 shall, after having consulted all other supervisory authorities concerned, designate a parent undertaking which is to be responsible for complying with this Title. The other undertakings in such group shall be considered as subsidiary undertakings.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 61 – point c

Directive 2009/138/EC
Article 212 – paragraph 6 – subparagraph 2 – introductory part

When designating a parent undertaking in accordance with the first subparagraph, the supervisory authorit~~ies~~y acting as group supervisor shall consider the following factors:

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 61 – point c

Directive 2009/138/EC
Article 212 – paragraph 6 – subparagraph 3

SThe supervisory authorit~~ies~~y acting as group supervisor shall regularly assess whether the designation remains appropriate. Where this is not the case, the supervisory authorit~~ies~~y acting as group supervisor shall designate another parent undertaking. That other ~~authority~~undertaking shall be responsible for complying with this Title.;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 63

Directive 2009/138/EC
Article 213a – paragraph 1 – point c

(c) business underwritten by all insurance and reinsurance undertakings in the scope of the group which have their head offices in Member States other than the Member State of the group supervisor is not higher in aggregate than 5 % of the total annual gross written premium of the group;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 63

Directive 2009/138/EC
Article 213a – paragraph 1 – point f a (new)

(fa) The group Solvency Capital Requirement is complied with and a capital add on has not been set;

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 63

Directive 2009/138/EC
Article 213a – paragraph 1 – point f b (new)

(fb) The group has not been convicted or been under investigations for committing or permitting money laundering or terrorist financing activities as defined in [insert reference to AMLD]

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 64 – point c

Directive 2009/138/EC
Article 214 – paragraph 3 – subparagraph 2

Before excluding the ultimate parent undertaking from group supervision pursuant to paragraph 2, point (b), the group supervisor shall consult EIOPA, and where applicable, other supervisory authorities concerned, and shall assess the impact of exercising group supervision at the level of an intermediate participating undertaking on the solvency position of the group. In particular, such an exclusion shall not be possible if it would result in a material improvement in the solvency position of the group.; The group supervisor shall also reassess at least annually whether its decision remains appropriate.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 64 – point c

Directive 2009/138/EC
Article 214 – paragraph 3 – subparagraph 2 a (new)

In order to enhance a coherent and consistent application of this paragraph, EIOPA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to further specify the exceptional circumstances referred to in the first subparagraph of this paragraph or the cases where it may be justified to exclude the ultimate parent undertaking, including insurance holding companies, from the scope of group supervision.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 79 – point a

Directive 2009/138/EC
Article 246 – paragraph 1 – subparagraph 4

The risk management system shall cover at least all insurance and reinsurance activities conducted within the group, as well as material non-insurance activities. It shall also cover the risks stemming from those activities to which the group is or could be exposed, including sustainability risks, and their interdependencies.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 79 – point c a (new)

Directive 2009/138/EC
Article 246 – paragraph 4 – first sentence (new)

(ca) in Article 246, the first sentence of paragraph 4 is replaced by the following: "Member States shall require the participating insurance under- taking or reinsurance undertaking, the insurance holding company or the mixed financial holding company to undertake at the level of the group the assessment required by Articles 45~~. (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~ and 45a. " Or. en

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 79 – point d

Directive 2009/138/EC
Article 246 – paragraph 5 – subparagraph 4 a (new)

The participating undertaking shall ensure that those persons have sufficient time and resources to perform all their tasks adequately. A policy on the management of the possible conflict of interests emerging from these situations should be established by the participating undertaking.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 80

Directive 2009/138/EC
Article 246a – paragraph 2 – subparagraph 1 a (new)

Where the subsidiaries are located in another Member State than the Member State of the participating undertaking, the group supervisor shall transmit the liquidity management plan to the supervisors of the subsidiaries.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 91

Directive 2009/138/EC
Article 304a – paragraph 1 – subparagraph 1

1. EIOPA, after consulting the ESRB, shall assess, on the basis of available data and the findings of the Platform on Sustainable Finance referred to in Article 20 of Regulation (EU) 2020/852 of the European Parliament and of the Council* and the EBA in the context of its work under the mandate set out in Article 501c, point (c), of Regulation (EU) 575/2013 whether a dedicated prudential treatment of exposures related to assets or ~~activ~~insurance liabilities associated substantially with environmental or social objectives would be justified. In particular, EIOPA shall assess the potential effects of a dedicated prudential treatment of exposures related to assets and ~~activ~~insurance liabilities which are associated substantially with harm to environmental and/or social objectives ~~or which are associated substantially with harm to such objectives~~ on the protection of policy holders and financial stability in the Union.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 91

Directive 2009/138/EC
Article 304a – paragraph 1 – subparagraph 2

EIOPA shall submit a report on its findings to the Commission by 28 June 2023. Where appropriate, the report shall consider a possible prudential treatment of exposures related to assets and ~~activ~~insurance liabilities which are associated substantially with environmental or social objectives or which are associated substantially with harm to such objectives and be accompanied by an assessment of the impact of the proposed amendments on insurance and reinsurance undertakings.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 91

Directive 2009/138/EC
Article 304a – paragraph 2 a (new)

2a. EIOPA shall evaluate whether and to what extent insurance and reinsurance undertakings assess their material exposure to risks related to biodiversity loss as part of the assessment referred to in Article 45(1). EIOPA shall subsequently assess which actions could be taken in order to ensure that insurance and reinsurance undertakings do so, where necessary, taking into account existing measurement tools. EIOPA shall assess to what extent insurance and reinsurance undertakings’ activities affect biodiversity, including through their investment and underwriting policies. EIOPA shall submit a report on its findings to the Commission by [one year after the entry into force of this amending Directive].

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 91

Directive 2009/138/EC
Article 304a – paragraph 2 b (new)

2b. EIOPA, EBA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, develop guidelines to ensure that consistency, long-term considerations and common standards for assessment methodologies are integrated into the stress testing of environmental, social and governance risks. Supervisory stress testing of environmental, social and governance risks should start with environmental-related factors. EIOPA, EBA and ESMA shall, through the Joint Committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010, explore how social and governance related risks can be integrated into stress testing.

2022/08/01
Committee: ECON

Proposal for a directive
Article 1 – paragraph 1 – point 95 – point a a (new)

Directive 2009/138/EC
Article 308c – paragraph 2

(aa) in paragraph 2 the third subparagraph is replaced by: "The portion referred to in the first subparagraph shall decrease linearly at the end of each year from 100 % during the year starting from 1 January 2016 to 0 % on 1 January 20320. ~~(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02009L0138-20210630)~~" Or. en

2022/08/01
Committee: ECON