Article 35
Information to be provided for supervisory purposes
1. Member States shall require insurance and reinsurance undertakings to submit to the supervisory authorities the information which is necessary for the purposes of supervision.

That information shall include at least the information necessary for the following when performing the process referred to in Article 36:

(a) to assess the system of governance applied by the undertakings, the business they are carrying on, the valuation principles applied for solvency purposes, therisks faced and the risk management systems, and their capital structure, needs and management;

(b) to make any appropriate decisions resulting from the exercise of their supervisory rights and duties.

2. Member States shall ensure that the supervisory authorities have the following powers:

(a) to determine the nature, the scope and the format of the information referred to in paragraph 1 which they require insurance and reinsurance undertakings to submit at the following points in time:

(i) at predefined periods;

(ii) upon occurrence of predefined events;

(iii) during enquiries regarding the situation of an insurance or reinsurance undertaking;

(b) to obtain any information regarding contracts which are held by intermediaries or regarding contracts which are entered into with third parties;

(c) to require information from external experts, such as auditors and actuaries.

3. The information referred to in paragraphs 1 and 2 shall comprise the following:

(a) qualitative or quantitative elements, or any appropriate combination thereof;

(b) historic, current or prospective elements, or any appropriate combination thereof;

(c) data from internal or external sources, or any appropriate combination thereof.

4. The information referred to in paragraphs 1 and 2 shall comply with the following principles:

(a) it must reflect the nature, scale and complexity of the business of the undertaking concerned;

(b) it must be accessible, complete in all material respects, comparable and consistent over time;

(c) it must be relevant, reliable and comprehensible.

5. Member States shall require insurance and reinsurance undertakings to have appropriate systems and structures in place to fulfil the requirements laid down in paragraphs 1 to 4 as well as a written policy, approved by the administrative or management body of the insurance or reinsurance undertaking, ensuring the on-going appropriateness of the information submitted.

6. The Commission shall adopt implementing measures specifying the information referred to in paragraphs 1 to 5, with a view to ensuring to the appropriate extent convergence of supervisory reporting.

Those measures, designed to amend non-essential elements of this Directive, by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 304 (3).

System of Governance - Articles 41 to 49

Governance system and general requirements - Article 41
Consistency of governance requirements across the banking, securities and (re)insurance sectors is essential to ensure cross-sectoral consistency. The governance requirements set out in this Directive aim at achieving this objective.

[Note: And to avoid regulatory arbitrage]

Robust governance requirements are a pre-requisite for an efficient solvency system.

Some risks may only be addressed through governance requirements rather than by setting quantitative requirements.

A robust governance system is hence of key importance for the adequate management of the insurer and critical to the effectiveness of the supervisory system.

The governance system includes compliance with the requirements on fit and proper, risk management, the own risk and solvency assessment, internal control, internal audit, the actuarial function and outsourcing.

The implementing measures on the governance requirements will specify the proportionality principle.

The identification of governance functions in the Directive should help undertakings in deciding how to implement the governance system. A function is an administrative capacity to undertake particular tasks.

The identification of a particular function does not prevent the undertaking from freely deciding how to organise this function in practice unless this is otherwise specified in this Directive.

This should not lead to unduly burdensome requirements because account should be taken of the nature, scale and complexity of the operations of the undertaking. The governance functions can therefore be staffed by own staff or can rely on advice from outside experts or can be outsourced to experts within the limits set by this Directive.

Furthermore, in smaller and less complex undertakings, more than one function can be carried out by one person or organisational unit.

In order to make the governance system work well, undertakings are required to have written policies in place which clearly set out how they deal with internal control, internal audit, risk management and, where relevant, with outsourcing.

It is essential that the administrative or management body is actively involved in the governance system. The written policies should therefore be approved by the administrative or management body and be revised at least annually or before any significant change is implemented in the system.

The amendment of the policies prior to the system change is essential because the undertaking would otherwise already be in non-compliance with its internal strategies and processes. It is the role of the supervisory authority in the SRP to review and evaluate the governance system.

Article 250
Supervision of the system of governance
Member States shall require the participating insurance or reinsurance undertaking or the insurance holding company to undertake *at the level of the group* the assessment required by Article 44.

The own risk and solvency assessment conducted at group level shall be subject to supervisory review by the group supervisor in accordance with Chapter III.

Where the participating insurance or reinsurance undertaking or the insurance holding company so decides, and subject to the agreement of the group supervisor, it may undertake any assessments required by Article 44 at the level of the group and at the level of any subsidiary in the group at the same time, and may produce a single document covering all the assessments.

Where the group exercises the option provided in the second subparagraph, it shall submit the document to all supervisory authorities concerned at the same time.

Exercising this option shall not remove from the subsidiaries concerned the obligation to ensure that the requirements of Article 44 are met.

You may visit the next pages

Own_Risk_and_Solvency_Assessment_1.html

Own_Risk_and_Solvency_Assessment_2.html

Own_Risk_and_Solvency_Assessment_3.html

The Own Risk and Solvency Assessment (ORSA) in the European Parliament legislative resolution of 22 April 2009 on the amended proposal for a directive of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (recast)