Solvency of Insurance Undertakings (Mueller-Report) - Eiopa

e put into practice. A number of delegations believe it would be useful to make the deduction of thereinsurance share conditional on the fulfilment of certain solvency requirements, others object to sucha procedure. Moreover, most of the delegations are against allowing the deduction of the reinsuranceshare in its present form only if the reinsurance business ceded is sufficiently spread.The delegations take the view, as they do regarding non-life insurance, that the national supervisoryauthorities should be given the possibility to reduce a deduction of the reinsurance share that isgenerally considered admissible, in an individual case, if there are doubts regarding the quality of thereinsurance concept or the reinsurer, or the stability of the reinsurance relationships4.2.2 Special cases4.2.2.1 Short-term risk insurancesRegarding short-term risk insurances under article 19 letter (a) of the first life-insurance Directive, themajority of delegations is in favour of maintaining the present regulation according to which theminimum required solvency is 1‰ of the capital at risk for a maximum term of 3 years, 1.5 ‰ of thecapital at risk for terms between 3 and 5 years, and 3 ‰ of the capital at risk for longer terms. Thereason given for this differentiation is that in the case of short-term risk insurances the risk isassessable. Only a small number of delegations believe that the present regulation should bereconsidered, because a lower risk may already have been allowed for in the premium calculation andbecause the solvency rules should be standardised for the purpose of simplification.4.2.2.2 Supplementary insurancesThe delegations are of the opinion that with regard to solvency provisions, supplementary insurancesunder article 1 (1) (c) of the first life-insurance Directive should in future be treated like non-lifeinsurance. Thus, in addition to the currently applicable premium index, a claims index should in anycase be introduced for this type of insurance and possibly a provision index as well as an investmentindex. It is, however, doubtful if the provision index will actually come into effect in the case ofsupplementary insurances.This analogous treatment should also extend to possible changes in the non-life sector. If thethresholds are abolished in non-life insurance, or the currently valid percentages are changed or anadditional index is introduced to take account of the investment risk, this procedure should also bebinding on supplementary insurances.The delegations suggest that supplementary insurance should be defined more precisely in theDirective in future in order to prevent the possibility of the separation of insurance classes beingcircumvented by cleverly subdividing the portfolio into main and supplementary insurance classes.- 31 -