FERMA supports the consideration of sustainability risks by insurers, however, there are concerns about the introduction of specific stress scenarios on sustainability for small and less complex insurers like captives, especially with regard to the ORSA.
FERMA believes that any new measure should apply the principle of proportionality in order to ensure that:
- Solvency II requirements are practically applied according to the nature, size and complexity of the regulated company;
- Regulatory actions and requirements are commensurate to their final objective.
FERMA supports the initiative of EIOPA for ensuring that insurance undertakings operating under Solvency II take into account sustainability within their respective solvency calculation models.
Captive (re)insurance companies are first and foremost a risk management tool for their parent and group entities and already benefit from sustainability risks management performed by the fronting insurers, possibly reinsurers and/or the captive’s parent group. Nevertheless, the captive can also have its own sustainability investment policy.
Therefore, FERMA calls on EIOPA to consider captive industry as a special regulated category that should be given the benefit of proportionality and non-complex solvency modelling.