- Background information
- Limitations and/or exemptions at solo level
- Limitations and/or exemptions at group level
- Proportionality principle in reporting
Use of limitations and exemptions in Solvency II reporting in the EEA
EIOPA-BoS-24-124
October 2024
Background information
As described in Article 35, paragraphs 6 and 7 of the Solvency II Directive, ‘solo’ undertakings may be subject to limitations or exemptions to report certain information as follows:
- Limitation: Submit quarterly reporting information of reduced scope, where this information is reported at least annually. All templates, with the exception of the minimum capital requirement (MCR) template, can be subject to a limitation (Article35 (6)).
- Exemption: Be exempted from both quarterly and annual reporting in case of reporting templates on an item-by-item basis under certain conditions (Article 35(7)).
Groups, as specified in Article 254(2), paragraphs 2 and 3, can benefit from limitations and/or exemptions from reporting only if all insurance or reinsurance undertakings within the group would benefit from the corresponding limitation and/or exemption.
Finally, Article 35 requires supervisory authorities to give priority to the smallest undertakings when determining the eligibility of the undertakings for those limitations.
Limitations and/or exemptions at solo level
In 2023, the same four NCAs granted limitations and/or exemptions from annual reporting to 118 solo undertakings, representing 5.04% of the total number of undertakings. This marks a decrease from 2022, when 139 solo undertakings (5.84% of the total) were exempted from annual reporting. The main contributor to this decline was France, where the number of undertakings exempted from annual reporting fell from 32 in 2022 to 17 in 2023. Meanwhile, Norway maintained its practice of exempting more than half of its undertakings from annual reporting.
Figure 1 - Number of solo undertakings with at least one limitation/exemption
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Annual reporting solo
In the EEA, only 5.04% of the total number of undertakings, representing 1.45% of the market share for non-life business (measured by gross written premium (GWP)) and 0.71% for life business (measured by technical provision (TP)) are benefiting from annual limitations and/or exemptions.
Table 1 - Overview of limitations/exemptions - by key measures
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Annual reporting solo
The derivatives templates are the most frequently exempted templates
in total. With the last amendment of the technical standards in 2023,
only the open derivatives template remains in force.
It is also
noteworthy that the templates exempted vary from undertaking to another,
indicating a risk-based approach that takes into account the specific
characteristics of each undertaking. As a result, it is not possible to
draw straightforward conclusions from this table, since certain
templates, such as those related to structured products or securities
lending and repo, may not be applicable to specific undertakings. In
these cases no limitations and/or exemptions would be granted.
Table 2 - Overview of limitations/exemptions - by template
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Annual reporting solo
This figure provides a graphical representation of the data in Table 2, illustrating the change in the number of exempted undertakings between 2022 and 2023 by country and template. The change for a specific template can be selected from the drop-down menu on the right.
Figure 2 - Change in number of exempted undertakings between 2022 and 2023 by template and country
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period considered are
shown.
Source: EIOPA Annual reporting solo
In Q1 2024, the same 11 NCAs granted limitations and/or exemptions to
quarterly reporting to 636 solo undertakings, a slight decrease from 649
solo undertakings in the same period last year. The proportion of
exempted undertakings to the total number of undertakings also fell
slightly, from 27.26% in 2023 Q1 to 26.98% in 2024 Q1, indicating a very
modest reduction in the use of proportionality measures for quarterly
reporting.
France and Luxembourg remained the most frequent
users of this measure, with their NCAs granting limitations and/or
exemptions to 284 and 188 undertakings, respectively. This represents a
significant proportion of their markets in terms of number of
undertakings, with 64.25% of undertakings in France and 71.48% in
Luxembourg covered. However, in terms of market share (measured by gross
written premium (GWP) and technical provision (TP) respectively), the
coverage is considerably lower, with one notable exception: the non-life
market in France, where the 16.50% market share covered is close to the
maxium allowed threshold of 20% (see Table 3).
Figure 3 - Number of solo undertakings with at least one limitation/exemption
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Quarterly reporting solo
A close examination of the NCAs where proportionality measures are most prevalent reveals the following:
- In Luxembourg, 71.48% of undertakings (the highest proportion) benefit from limitations and/or exemptions, which translates to a market share of 11.13% for non-life business and 0.15% for life business.
- At the other end of the spectrum, Denmark and Italy each have a single undertaking that benefits from a limitation and/or exemption, accounting for less than 0.3% of their respective non-life business and less than 0.1% of their respective life business.
Table 3 - Overview of limitations/exemptions - by key measures
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Quarterly reporting solo
- Investment reporting templates (i.e., templates on collective investment undertakings, list of assets and open derivatives) were the most frequently exempted templates in Q1 2024.
- Undertakings from Luxembourg, Malta, Portugal and Sweden that are granted a limitation and/or exemption from quarterly reporting are exempted from reporting all templates.
- Denmark, Italy, Liechtenstein and Norway consistently do not exempt the balance sheet.
- Germany continues to exempt nearly all quarterly templates, except the own funds template.
Table 4 - Overview of limitations/exemptions - by template
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Quarterly reporting solo
This figure provides a graphical representation of the data in Table 4, illustrating the change in the number of exempted undertakings between 2023 Q1 and 2024 Q1 by country and template. The change for a specific template can be selected from the drop-down menu on the right.
Figure 4 - Change in number of exempted undertakings between 2023 Q1 and 2024 Q1 by template and country
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period considered are
shown.
Source: EIOPA Quarterly reporting solo
Limitations and/or exemptions at group level
In 2023, two NCAs granted limitations and/or exemptions to annual reporting to eight groups, a decrease from ten groups exempted in 2022. Notably, France reduced the number of exemptions by two, whereas Germany maintained the same level of exemptions as in the previous year.
Figure 5 - Number of groups with at least one limitation/exemption
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Annual reporting group
In Q1 2024, a reduction in the number of NCAs granting limitations
and/or exemptions to quarterly reporting was observed, with three NCAs
doing so, compared to four in the corresponding quarters of 2023 and
2022.
Furthermore, the number of groups benefiting from such
exemptions decreased by 5, from 24 in Q1 2023 to 19 in Q1 2024.
It is worth noting that both Germany and France maintained consistency
in their quarterly reporting exemptions, with the same groups being
exempted as in the previous year.
Figure 6 - Number of groups with at least one limitation/exemption
Note: Only countries that had at least one limitation and/or
exemption granted during the reference period are shown.
Source:
EIOPA Quarterly reporting group
Proportionality principle in reporting
In order to illustrate the implementation of proportionality in
supervisory reporting, EIOPA has updated the example presented in
previous reports. This updated example reaffirms the previous
conclusions that proportionality requirements embedded in technical
standards achieve their intended objectives.
However, it is
noteworthy that the number of reported templates still does not fully
account for the complexity of the business and the effort required to
complete them. For instance, smaller undertakings with limited lines of
business or solely domestic business often face a significantly lower
level of complexity in certain templates compared to undertakings with
broader business structures.
On an annual basis, the largest 10% of undertakings by total assets were required to submit approximately 38 templates in 2023, a slight increase from around 37 templates in 2022. In contrast, the smallest 10% of undertakings had to complete around 29 templates in 2023, a modest increase from approximately 28 in 2022.
Figure 7 - Average number of templates provided by undertaking
Source: EIOPA Annual reporting solo
In Q1 2024, large undertakings submitted approximately nine quarterly templates, a slight decrease compared to the same period in 2023. In contrast, small undertaking submitted an average of around five templates in Q1 2024, with the number remaining broadly constant compared to the same period in 2023.
Figure 8 - Average number of templates provided by undertaking
Source: EIOPA Quarterly reporting solo
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