Answers to the European Commission on the ... - Eiopa - Europa

particular reinsurer(s)’ aggregate portfolio(s). Where possible
and appropriate <strong>the</strong> reinsurance cover should be diversified
among a number of reinsurers <strong>to</strong> improve <strong>the</strong> overall security of
<strong>the</strong> reinsurance programme and <strong>to</strong> avoid concentration risk.
- The amount of collateral, if any, that <strong>the</strong> insurance undertaking
may require from individual reinsurers at any given time,
depending on <strong>the</strong> particular circumstances.
• provide for <strong>the</strong> maintenance of an up-<strong>to</strong>-date register of
reinsurers, as approved by <strong>the</strong> Board, including <strong>the</strong> maximum
level of exposure for each reinsurer. This register shall be
available <strong>to</strong> <strong>the</strong> supervisory authority on request;
• identify <strong>the</strong> process of moni<strong>to</strong>ring, reviewing and amending <strong>the</strong>
Reinsurance Management Strategy in response <strong>to</strong> changes in <strong>the</strong>
risk profile of <strong>the</strong> undertaking or in <strong>the</strong> market conditions; and
• set principles for <strong>the</strong> management of liquidity risk related <strong>to</strong> <strong>the</strong>
time interval between <strong>the</strong> payment of insurance claims and <strong>the</strong>
amounts being recovered from reinsurer.
12.28 The Reinsurance Management Strategy should also describe <strong>the</strong> main
risk management and internal control procedures related <strong>to</strong>
reinsurance operations and shall at least describe <strong>the</strong> following
procedures:
ART Strategy
• for moni<strong>to</strong>ring <strong>the</strong> implementation of <strong>the</strong> overall reinsurance
management strategy;
• for verifying <strong>the</strong> retention limits established;
• for moni<strong>to</strong>ring confirmation of reinsurance documentation;
• for moni<strong>to</strong>ring reinsurance recoverables; and
• for moni<strong>to</strong>ring <strong>the</strong> security of each reinsurer.
12.29 Notwithstanding <strong>the</strong> definition for <strong>the</strong> overall Reinsurance Management
Strategy, <strong>the</strong> ART strategy, which should be implemented and
documented by Senior Management, shall also:
• identify <strong>the</strong> rationale for using ART;
• ensure that ART arrangements include genuine risk transfer
before <strong>the</strong>y may result in a change in <strong>the</strong> SCR;
• identify <strong>the</strong> risks <strong>to</strong> be covered by ART arrangements;
• ensure that ART arrangements fully reflect all of <strong>the</strong> risks that are
<strong>to</strong> be covered;
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