The European Insurance and Occupational Pensions Authority has called for better public disclosure as part of the incoming Solvency II regime.
A two-page paper published by the body last week said one of the cornerstones of the new regime was transparency.
It said: “In order to guarantee transparency, the Solvency II directive requires insurance and reinsurance undertakings to publically disclose essential information on their solvency and financial condition.
“For most parts of the European insurance and reinsurance market this is a novelty and a paradigm shift in terms of communication with the outside world, which previously in terms of prudential information was quite often limited to reporting to supervisory authorities.”
The paper also said that the insurance industry should embrace the opportunity Solvency II presents.
It said external audit could be a “powerful tool” in ensuring high quality public information.
On 9 July, Sam Woods, executive director, insurance supervision for the PRA, told the ABI’s Solvency II seminar that the PRA would be communicating internal model approvals this year.
The ABI’s director general, Huw Evans said: “We welcome the PRA’s clarity on the communication of internal model approvals. Regulatory decisions will now be communicated simultaneously to all firms in early December 2015, which is very close to the January 2016 Solvency II starting date.
“The industry will work closely with the PRA over the coming months to ensure this process can work in practice.”
Background box
The Solvency II directive puts in place a consistent solvency and capital adequacy framework for insurers across Europe and aims to provide greater protection to policyholders by reducing the probability of an insurance firm failure.
It comes into effect in January.
