MFSA Issue Another Consultation On Solvency II
by Lorys Charalambous, Lowtax.net, Cyprus
19 November, 2015
The Malta Financial Services Authority has initiated another public consultation on amendments to align current insurance rules with the provisions of the Solvency II Directive. Responses are being accepted until December 7, 2015.
The current consultation process looks at new rules for the Insurance Business Act (IBA). It follows a similar process in March and April, which examined reporting requirements. The feedback from these surveys will help the MFSA to form a new single Insurance Rulebook to be issued under the amended IBA.
Solvency II, which is due to come into effect on January 1, 2016, will introduce a new regulatory framework for all European insurance and reinsurance companies. This will be based around three "pillars":
- Pillar 1 sets out quantitative requirements, including the rules to value assets and liabilities (in particular, technical provisions), to calculate capital requirements, and to identify eligible own funds to cover those requirements;
- Pillar 2 sets out requirements for risk management, governance, as well as the details of the supervisory process with competent authorities. This will ensure that the regulatory framework is combined with each undertaking's own risk-management system and informs business decisions; and
- Pillar 3 addresses transparency, reporting to supervisory authorities and disclosure to the public.
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