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EIOPA seeks info on sustainability risks in Solvency II world

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The European Insurance and Occupational Pensions Authority (EIOPA) is seeking information from insurers about the integration of sustainability risks in investment and underwriting practices.

“With this call for evidence EIOPA will analyse how sustainability risks affect (re)insurers’ investments, with particular focus on climate change and collect market practices on insurance underwriting,” the supervisory authority said.

The information-gathering exercise comes after the European Commission asked EIOPA to “provide an opinion” on Solvency II and sustainability, focusing on climate change mitigation.

EIOPA said the Commission had asked it to assess whether Solvency II presented “any inherent incentives and/or disincentives to sustainable investment, including but not limited to investments in unrated bonds and loans, unlisted equity and real estate”.

The “call for evidence” closes at midnight Central European time on 8 March. EIOPA said national supervisors would help the exercise by collecting information from relevant individual institutions within their jurisdictions.

Based on the collected evidence and analysis EIOPA would then prepare a draft option for consultation during the second half of this year, for submission to the Commission in the third quarter.

The supervisory agency also has a 30 April deadline to provide “technical advice” to the Commission on potential amendments or the introduction of delegated acts under Solvency II with regard to the “integration of sustainability risks and factors”. A consultation on its draft advice closes at the end of January.

These steps are part of the implementation of the Commission’s sustainable finance action plan.

In developing the technical device in relation to Solvency II, EIOPA was asked to bear in mind that a delegated act could be adopted under IORP II. This has been resisted by pension funds, and will be discussed during negotiations between the European Parliament and the EU Council, which adopted different positions on the matter.

EIOPA also has a sustainable finance action plan, which it said aimed “to co-ordinate different projects with the aim of ensuring that insurers and pension funds operate in a sustainable manner” by:

  • managing and mitigating environmental, social and corporate governance risks appropriately;
  • reflecting preferences of policyholders and pension scheme members for sustainable investments; and
  • adopting a sustainable approach to their investments and other activities. 

EIOPA’s call for evidence in relation to sustainability risks and Solvency II can be found here

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