ICISA responds to European Commission’s consultation on Solvency II delegated regulations amendments — What was covered?

The European Commission has opened a consultation on amendments to the Solvency II delegated regulation amendments, aimed at safeguarding policyholders while strengthening insurers’ role in financing the economy through simplification that does not compromise prudential soundness.

ICISA response focuses on three areas of particular relevance to trade credit insurance and surety:

• Article 311 (paragraphs 6 and 8): the draft requires reporting of transactions “entered directly or indirectly.” ICISA notes that this wording is unclear and could be misread as extending to credit insurance (or surety) coverages of receivables from factoring or supply chain finance. ICISA’s understanding is that these are not within scope, as the provision aims to capture financing activities undertaken by insurers themselves, not core insurance business. Likewise, the reference to “liquidity risk exposure” should not be read as encompassing such coverages. To prevent divergent supervisory interpretations, ICISA recommends that Article 311 be clarified explicitly to confirm that trade credit insurance, surety, and insurance of receivables linked to factoring or supply chain finance fall outside the reporting requirements.
• Minimum Capital Requirement: the recalibration reduces the factor for technical provisions to 16.0% and increases the factor for premiums to 17.7%. ICISA recognizes the objective but calls for further dialogue to ensure calibration remains proportionate to actual risk.
• Public counter-guarantees: ICISA welcomes the recognition of these as eligible credit risk mitigation under the spread risk sub-module, as credit insurance (or surety) continues to play an important role in facilitating access to finance and supporting the real economy where public guarantee schemes are in place.

Overall, ICISA stresses that clarification of Article 311 and proportionate MCR calibration are key to preserving a risk-based framework that enables insurers to continue supporting trade, investment, and the European economy.

To read the full response — click the link.