The European Insurance and Occupational Pensions Authority (EIOPA) published today altogether seven instruments related to the implementation of the Insurance Recovery and Resolution Directive (IRRD). The package includes four guidelines and three draft regulatory technical standards (RTS) covering areas of the framework from the range of stress scenarios for pre-emptive recovery planning to the rules determining the independence of valuers for the resolution

• Guidelines on scenarios: These Guidelines outline a range of macroeconomic and financial stress scenarios to be used for assessing the credibility and feasibility of insurers’ pre-emptive recovery plans. The scenarios include both system-wide and insurer-specific stress events—such as mass policy lapses and underwriting losses as well as a combination of these events—whose impact will be assessed on the solvency position, liquidity and profitability of the undertaking or group.

• Guidelines on indicators: These Guidelines define the qualitative and quantitative indicators to be considered in pre-emptive recovery plans, including indicators related to capital and liquidity positions, asset quality, profitability, market conditions, macroeconomic conditions and operational events.

• Guidelines on the provision of information: These Guidelines establish the rules regarding the use of exemptions to professional secrecy for confidential information, notably for cases where disclosures are made in summary or in collective form without allowing the identification of individual entities.

• Guidelines on simplified obligations: These Guidelines outline elements to be considered by supervisory and resolution authorities based on the eligibility criteria for simplified obligations. EIOPA further specifies criteria like the nature of business, shareholding structure, legal form, risk profile, size, legal status, interconnectedness metrics as well as the scope and complexity of activities to be considered when assessing whether an undertaking or group is eligible for simplified obligations.

• RTS on the independence of valuers: These RTS specify the conditions under which a candidate valuer is deemed to be independent from both the resolution authority and the entity under resolution and may perform the valuation of an entity’s assets and liabilities.

• RTS on contractual recognition of resolution stay powers: These RTS establish standardized terms for financial contracts that would allow the resolution authority to exercise its stay powers (i.e. powers to suspend or restrict rights and obligations) over contracts governed by third-country law. The consistent recognition of such powers supports the cross-border enforceability of the resolution authority’s actions.

• RTS on the valuation of liabilities from derivatives: These RTS specify methodologies and principles for the valuation, in the context of resolution, of liabilities arising from derivatives.