CEIOPS' Advice for Level 2 Implementing ... - EIOPA - Europa

development, so that it is likely that a description of specific simplified
techniques and their application criteria would need to be regularly
reviewed and updated. The legal framework provided by Level 2 may
not be sufficiently flexible to achieve this aim;
• The principle of proportionality provides an adequate framework to
ensure that undertakings apply appropriate methodologies for the
valuation of technical provisions, including the use of simplified
techniques. The expectations and requirements on the undertaking’s
proportionality assessment 53 are principles-based rather than rulesbased
and would not need to be supplemented by providing simplified
methods on Level 2.
3.128 On the other hand, not including to some extent a specification of
simplified valuation techniques on Level 2 may erode the intention of the
Level 1 text to achieve an increased harmonisation of quantitative and
qualitative supervisory methods, including technical provisions.
3.129 In this regard, recital 53 of the Level 1 text states that
(53) […] The principles and actuarial and statistical methodologies
underlying the calculation of those technical provisions should be
harmonised throughout the Community in order to achieve better
comparability and transparency.
3.130 In the same vein, recitals 15 and 58 stipulate that
(15) […] Harmonisation should be increased by providing specific rules
for the valuation of assets and liabilities, including technical provisions.
(58) […] The use of effective and harmonised actuarial methodologies
should be required.
3.131 A need to achieve harmonisation would be particularly relevant in areas
where the use of simplified methods in the valuation is widespread, and
where a common understanding of an actuarial “best practice” is still
evolving.
3.132 Not including any detail on specific simplified valuation methods in Level
2 may also raise concerns with respect to the needs of small and
medium-sized (re)insurance undertakings. 54 Whereas it could be argued
that these needs are sufficiently addressed in a proper application of the
principle of proportionality, an inclusion of specific simplified valuation
methods in Level 2 may be helpful for small and medium-sized
undertakings in
• making available valuation techniques which are tailored to the
specificities of their business; and
• providing legal certainty on the appropriateness of such techniques
under the Solvency II framework.
3.133 This consideration is also reflected in recital 59 of the Level 1 text which
states that
53 See section 3.1 for details
54 Note that the Level 1 text emphasises that the new solvency regime should not be too burdensome for
small and medium-sized insurance undertakings, cf. Recital 14b of the Level 1 text.
31/112
© CEIOPS 2010