The Danish ministry of business and growth has issued an executive order potentially cutting Solvency II reporting requirements for small pensions firms and insurers, with PenSam, JØP, DIP, Bankpension and PKA among those that may now be able to reduce their paperwork.
Troels Lund Poulsen, minister for business and growth, said: “It is the government’s aim to bring down burdens on business significantly by 2020.”
He said he hoped the new order would make life easier for small insurance and pension companies in cases where the Danish FSA (Finanstilsynet) found that the heavy reports could be dispensed with.
“It may have profound implications for individual companies, which will spend less time on cumbersome and heavy paperwork,” he said.
The decree – entitled ‘Executive order on proportional reduction of the regular supervisory reporting for group 1 insurance companies, etc.’ – will come into force on 1 July.
It allows insurance companies, life insurers and pension providers, which have a combined market share in their respective markets of less than 20%, to apply to the FSA for dispensation to reduce reporting required under the Solvency II legislation now implemented in Denmark.
The ministry issued a list of 70 companies that now have the option of applying for this dispensation, including the pension providers PenSam, JØP, DIP, Bankpension and PKA (as well as the three health and social care sector pension funds it runs), the architects’ pension fund AP, the pension fund for Agricultural Academics and Veterinary Surgeons (PJD) and PBU.
Per Plougmand Baertelsen, director of the life assurance division of the FSA, explained that companies on the list – or certain entities within those companies – were small enough in size to be allowed to apply for permission to reduce their mandatory reporting.
“But, before we grant this dispensation, we will look at the nature, scale and complexity of the business in question and whether the current reporting requirement is considered to be a burden,” he said.
However, not all companies on the list would definitely apply, he said, and of those that do, some cannot expect to be granted the level of concession they asked for.
“But, for a number of the companies, the mandatory reporting will be significantly lower,” Plougmand Baertelsen said.
Anne-Mette Munck, a consultant at F&P in its department of economic affairs, said the association welcomed the news and had been lobbying to bring about the change, which relates to quantitative reporting templates included in pillar three of the Solvency II Directive, the area of the EU framework focusing on disclosure and transparency requirements.
“We have been working hard to achieve these new reduced requirements, and it has been a hard job to get this far,” she said, adding that this was definitely a positive move from the ministry.
Munck said the impact on Danish pension and insurance companies in terms of reducing paperwork was still unclear.
“But we hope it will be a huge difference, even though only for small pension funds,” she said.
Munck said the association was always working on ways to ease the administrative burden on its members that arose from regulation in general.
Without naming specific regulations, she said F&P was trying to get the government to remove some specific local regulation that was only put on Danish companies and not on their EU counterparts.