IRSG Advice on two RTS's on IRRD valuation related topics
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EIOPA's Insurance and Reinsurance Stakeholder Group (IRSG) supports common methodologies for Valuations 1, 2 and 3 under the Insurance Recovery and Resolution Directive (IRRD), but asks that they be proportionate and operationally feasible. It calls for decision-useful provisional valuations when there is no time for a definitive one and for Valuation 3 to respect national insolvency law.
Key points
- Policyholder protection should remain central to all three valuations
- Asks for materiality thresholds and not to require several valuation engines running at once
- Accelerated-sale and illiquidity discounts should be evidence-based and separately identified
- Valuation 3 (insolvency counterfactual and NCWO safeguard) should reflect insurance guarantee schemes
Who is affected
Insurers and reinsurers, resolution authorities, independent valuers
Plain-language version
The IRRD is the new EU law on what to do if an insurer fails or is about to. The insurance stakeholder group advising EIOPA, the EU watchdog for insurers and pension plans, supports common methods for valuing an insurer in trouble, but asks for them to be workable and to put the protection of policyholders first.
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