EIOPA-BoS-14/235 31 October 2014 Financial Stability Committee andate I. Background In accordance with its mandate [especially Articles 8 and 22, EIOPA Regulation (1094/2010)] EIOPA will perform market intelligence functions regarding its supervisory universe, in particular develop a market surveillance framework to monitor and report on market trends and financial stability related issues to fulfil its own tasks and provide high quality input to the supervisory tasks of its embers and as a member to the ESRB. To this end, EIOPA has to build and update the necessary data pool and develop the analytical tools and procedures needed to deliver on its financial stability assignment. To supply the necessary analysis in its design and content, and to assure a solid discussion of the related subjects prior to their submission to the BoS, EIOPA FSC shall identify and assess risks and threats to the financial stability of insurance and occupational pension sectors, including possible mitigation and management thereof, in line with the EIOPA s strategic goal. II. Tasks of the Committee Establish a macro-prudential surveillance programme for monitoring the interplay between (re)insurance/occupational pension funds and financial stability, as foreseen in cooperation with the other ESAs and ESRB, based on information reported by the embers and Observers of EIOPA; Study and report on financial stability issues of relevance to the (re)insurance and occupational pension funds sectors in general, with a specific focus on contributing to the work of the ESRB and to support microprudential supervision through providing the related benchmarking information to (group) supervisors; Provide the necessary analytical input for the work of other EIOPA committees; onitor cross-sectoral risks; 1/5
Contribute to assessment of systemic risk; Contribute to the work of, and cooperate with, the ESRB, EFC and FSC; Support the set up and development of data collection [article 8, EIOPA Regulation (1094/2010)] on insurance and pension funds; Produce a methodology for assessing the risks of product characteristics and distribution processes on the financial position of institutions; Perform regular stress tests of the insurance and IORPs sectors and contribute to ESRB s systemic risk stress test;. Carry out additional studies, training and seminars linked to the issue of financial stability as required by EIOPA insofar as such projects can be accommodated with the committee's core tasks, including necessary data collection not covered by EIOPA s regular reporting; and Cooperate with other EIOPA committees to ensure consistency of the output. Treat issues pertaining to its mandate prior to their BoS discussion. III. Organisation of work In carrying out its tasks the Committee is supported by EIOPA staff in the preparation of meetings, consultations, and in the drafting of proposals, conclusions and action points. The Committee will organise itself along main work streams, to be covered by four Sub-Groups: 1. Stress Testing Developing and designing in cooperation with ESRB, a robust bottom-up and top-down stress testing framework including the relevant stress scenarios for (re)insurance; Conducting stress tests in cooperation with the ESRB and the ECB. 2. Risk Assessment Developing a conceptual framework for the exchange of data, systemic risk analysis and for the identification of systemic importance in insurance (in cooperation with ESRB/ECB/other ESAs or international bodies like the IAIS/FSB); Developing and implementation of the risk assessment framework and analysis e.g. Risk dashboard (in cooperation with ESRB/ECB/other ESAs); Cooperating with the ESRB on an ad-hoc basis (e.g. in a crisis situation); Contributing to the Joint Committee s works on cross-sectoral risks to financial stability. 3. Statistics and Structural Analyses 2/5
Setting up the database with historic FS reporting (including quality checks and ensuring consistency over time) for insurance and pensions; Contributing to the development of the Solvency II reporting framework from a financial stability perspective; Developing a framework for collecting structural data on insurance and occupational pension funds markets (in cooperation with OPC). 4. FSC/OPC Pension Stress Test The mandate of this Sub-group, to be carried out with joint FSC/OPC input, covers the following items: Conducting the preparatory and technical work on stress testing for IORPs in close cooperation with OPC; Designing the stress testing framework, including the relevant stress scenarios, in coordination with the Stress Test Sub-Group and with the support of the ESRB/ECB; Conducting IORP stress test exercises. IV. Chairperson Patrick Darlap (AT, FA) since July 2010, re-elected July 2013. The Committee has a Vice Chairperson (Dieter endrickx, BE, NBB; since September 2013). V. Review of the andate (including Chairmanship) At least every three years on policy matters and once a year for detailed deliverables. The mandate of the working group shall be reviewed during the second half of 2015 as part of a general review of the EIOPA working group structure. VI. Deliverables for 2015 (N.B. This section will be updated annually) The FSC will liaise closely with other committees within EIOPA such as the Committee on Consumer Protection and Financial Innovation, the Occupational Pensions Committee and relevant Solvency II Committees, and the Internal onitoring Group to ensure consistency and efficiency in formats and requests for (future) data collections. EIOPA has set as the highest priority the work on areas that are required by regulations or requested by the European Commission by a certain deadline or have a potential high impact for the affected sectors. 3/5
Project Report timely on financial stability issues for input to EIOPA s reporting obligations towards Financial Services Committee, Economic and Financial Committee-FST, EP, Council and the ESRB General Board Cooperation with ESRB and relevant substructures and attendance of the relevant meetings (ATC, AWG, IEG, IWG, Shadow Banking EG) Assessment of developments in the European (re)insurance and occupational pensions sectors which have implications for financial stability including the drafting of EIOPA s Financial Stability Report (semi-annually), the production and methodological improvement of the EIOPA s Risk Dashboard (quarterly). Support IGSRR from a financial stability point of view to the finalization of the Solvency II reporting framework Timeline EIOPA Board of Supervisors Priority (Q1 to Q4 2015) igh (), edium (), Low (L) Ongoing All Ongoing Ongoing All plus written procedures Ongoing (via IGSRR) Report on cross-sectoral risks stemming from the insurance and occupational pension fund sector to the Risk Sub-Committee of the Joint Committee Q1 and Q3 Written procedures 2015: performing a stress test for the occupational pension funds according to specific BoS mandate Q4 2014 - Q1 2015 Q2-Q3 Specifications; Conducting the exercise Q4 Final report: Prepare a framework for the 2016 insurance stress test Q4 2015 No involvement Develop methodologies on an insurance top-down stress test framework and run the analysis in 2015. Q1-Q3 Information about Preparation for SII implementation, in particular by mapping SII data to the relevant macro-prudential indicators, reviewing FS methodology to align it with the new environment, adapting the RD, assure a documented changeover in the published data. Q1-Q4 Agreement on changes in RD Organisation of one EIOPA advanced seminar on Quantitative Techniques in Financial Stability Q3 no 4/5
Project Report on potential risks for insurers running non-traditional, in particular bank-like credit business. Timeline (Q1 to Q4 2015) Q3 EIOPA Board of Supervisors Approval of Priority igh (), edium (), Low (L) Investigate on the potential development of an early warning system (empirical model) for the financial stability assessment of the European insurance sector. 2015 Information about Develop a terminology and classification of macro-prudential instruments in the insurance sector. Q1-Q3 Approval of The following key issues where cooperation with other committees is required have been identified to date: Close liaison with other working groups within EIOPA such as the Internal onitoring Group, the Committee on Consumer Protection and Financial Innovation, the Occupational Pensions Committee for developing a proposal for a stress test on IORPs and carrying out the exercise. Close cooperation with the relevant Solvency II Committees to ensure consistency and efficiency in formats and requests for (future) data collections. 5/5