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

incurred when the method is applied by individual undertakings;
• this does not lead to the impression that it would no longer be
necessary for the undertaking to undertake an own assessment of
the appropriateness of the method, including an assessment of the
degree of model error.
List of simplified methods
3.253 In line with Article 86 (h) CEIOPS is required to provide, where
necessary, simplified methods and techniques to calculate technical
provisions. CEIOPS provides in this document a list of methods and
techniques for the estimation of:
• Life, non life and health best estimates
• Risk margin
• Reinsurance recoverables and adjustments due to counterparty
defaults
• Quarterly calculations
These methods and techniques should not be seen as a prescriptive list
of methods, but as an open list.
3.254 Furthermore, CEIOPS advises not to introduce an exhaustive list of
methods and techniques as level 2 implementing measures for the
estimation of the best estimate, and would prefer to keep such
methods and techniques as level 3 guidance. The rationale is that a
principles based approach is more appropriate for level 2 advice,
particularly since the methods illustrated may not be appropriate for
all risk profiles. Furthermore, in line with stakeholder comments,
methods continue to develop and prescription could hinder innovation
in this area.
3.255 However, as analyzed in the following subsection, CEIOPS recognizes
that the risk margin is a specific area where additional considerations
should be included in the Level 2 text, due to the complexity and
uncertainty around the calculation methodology. Moreover, CEIOPS
would support flexibility for undertakings to use other simplified
methods or techniques, provided they can demonstrate that these are
appropriate.
53/112
© CEIOPS 2010