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

9.60 In combination with <strong>the</strong>se principles <strong>the</strong>re are detailed quantitative
rules (Articles 22 and Article 24 of <strong>the</strong> respective Directives).
9.61 CEIOPS suggests that <strong>the</strong> future regime uses a 'prudent person plus'
approach. The idea of <strong>the</strong> 'prudent person plus' approach is <strong>the</strong>
combination of three different types of requirements:
• <strong>the</strong> risk-based SCR;
• qualitative requirements on <strong>the</strong> management of assets and
liabilities; and
• eligibility criteria for assets, asset-liability mismatches and limits
on asset concentrations.
9.62 Within this combination, quantitative limits on assets will function as a
necessary safety net <strong>to</strong> help <strong>to</strong> prevent that <strong>the</strong> insurer inappropriately
manages its assets and liabilities. Such a safety net will also be needed
for those types of risks that are in principle covered by <strong>the</strong> SCR, since
<strong>the</strong> SCR (as any mechanistic capital requirement) will not always be
able <strong>to</strong> assess those risks in a proper way.
Harmonisation
9.63 The existing investment rules provide minimum harmonisation, and call
for <strong>the</strong> establishment of more detailed national rules. There is also a
possibility of undertaking exemptions from certain rules, subject <strong>to</strong>
supervisory approval.
9.64 The degree of harmonisation and <strong>the</strong> scope of national rules and
undertaking exemptions in <strong>the</strong> future regime is a matter of political
decision. Following <strong>the</strong> CfA, CEIOPS assumes that <strong>the</strong> rules should aim
for a higher level of harmonisation.
9.65 However, it seems important that some degree of flexibility is
maintained <strong>to</strong> reflect particular characteristics of national markets and
<strong>to</strong> avoid a dis<strong>to</strong>rtion of competition on an international level due <strong>to</strong>
differences in <strong>the</strong> structure of products.
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