Ceiops forms QIS5 task force

The Committee of European Insurance and Occupational Pensions Supervisors (Ceiops), the Frankfurt-based organisation charged with developing Solvency II, has set up a task force to deliver the fifth Quantitative Impact Study (QIS5).


The Ceiops secretariat-led task force will be responsible for supporting all expert groups in preparing and running QIS5, ensuring any overlapping areas in the exercise are dealt with in a consistent manner and making sure the QIS5 technical specifications and calibration paper are delivered to the European Commission (EC) on schedule by the end of March 2010.

The EC will then publish the final technical specifications for industry by the end of July, before running the exercise between August and mid-November 2010. Ceiops said results for solo entities would need to be submitted to national supervisory authorities by the end of October 2010, while the deadline for group results is mid-November 2010.

But one member of the CRO Forum, the 15-strong body of chief risk officers, representing Europe's leading insurers, told Life & Pensions the QIS5 rules as they currently stand could double the QIS4 capital requirement and lead to mass insolvencies.

"If enacted in its current form, especially the rules restricting what qualifies as tier 1 capital, the risk margin in the technical provisions, and the correlation assumptions, will lead to an increase of 75–125% above the QIS4 results," the source said.

"I don't think the industry will be able to live with that. Ceiops needs to leave itself a back door [out of the current rules] before it becomes a political football."

In response to industry appetite for early engagement and clarity on the issue of internal models, Ceiops also issued a consultation paper on Level 3 guidance for Solvency II on the internal model pre-application process.

Consultation Paper 80 (CP80) is based on the Final Level 2 Advice for the internal model approval process, which was submitted to the European Commission in November last year.

The paper provides further advice and guidance on the operation of the College of Supervisors (formerly known as Coordination Committees), as Ceiops said it felt the majority of internal model applications were likely to be for group internal models.

It recognised the fact that the complexity of many group insurance undertakings and internal models made the issuance of guidance on the pre-application process for group internal models of particular interest to the industry.

Ceiops warned companies preparing internal models also needed to have processes set up to calculate requirements under the standard model and consider the capital planning implications as a result, as there was no guarantee of approval.

Ceiops' deadline for submissions is March 8, 2010.

http://www.risk.net/life-and-pensions/news/1589448/ceiops-forms-qis5-task-force