Stand:updated on 26.03.2015 | Topic Solvency Applications for approval of internal models
Since 1 April 2015, undertakings have been able to submit applications to BaFin for approval of internal models.
Application
The “EIOPA Common Application Package for Internal Models” should be used by the applicant for all types of formal applications. This is not a statutory requirement, but BaFin does follow the corresponding EIOPA Opinion here. The details on the submission of the application should be agreed beforehand with the supervisory authority responsible.
After receiving the application, BaFin will send the applicant a confirmation of receipt. It then checks that the application is complete and informs the applicant within 30 days following receipt (45 days for applications pursuant to Article 231 of the Solvency II Directive) whether its application is complete. If this is not the case, the applicant receives a list of the documentation that is still missing. If the application is complete, a decision is made within a period of 6 months from the receipt of the complete application. The insurance undertaking is notified of the reasons for the decision made. It is notified of the approval or rejection in writing. The application procedure is subject to a fee.
Formal review of the application and rules of procedure
The legal requirements differ depending on the type of model in the relevant application:
Solo models:
Applications for the use of an internal (partial) model in accordance with Articles 112 and 113 of the Solvency II Directive (sections 111 and 112 of the Act to Modernise Financial Supervision of Insurance Undertakings (Gesetz zur Modernisierung der Finanzaufsicht über Versicherungen – Tenth Amendment to the VAG)) are formally subject to the “ITS internal models approval processes” (previously EIOPA-CP-14/005).
Model for calculating the consolidated group Solvency Capital Requirement (SCR):
The application for calculating the consolidated group SCR in accordance with Article 230 of the Solvency II Directive (section 261 (2) of the VAG) is in principle subject to the “ITS internal models approval processes” (previously EIOPA-CP-14/005) pursuant to no. 8 of the introduction to the ITS. More specific and additional requirements are provided in Articles 343-346 of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 (“Delegated Regulation”).
Group internal model:
If the application is for use of a group-internal model in accordance with Article 231 of the Solvency II Directive (section 262 of the Amendment to the VAG), the “ITS internal models approval processes” (previously EIOPA-CP-14/005) in principle also apply, pursuant to no. 8 of the introduction to the ITS. More specific and additional requirements are provided in Articles 347-350 of the Delegated Regulation. In this context, it must be noted that the Delegated Regulation is the overriding provision. In accordance with Article 348 (1) of the Delegated Regulation, for instance, a period of 45 days applies to the completeness check as compared with 30 days under Article 3 (2) of the ITS.
The “ITS on the joint decision process for group internal models” (previously EIOPA-CP-14/006) also apply in relation to the decision-making process in colleges (joint decision) within the scope of the application procedure pursuant to Article 231 of the Solvency II Directive.
When assessing an application, BaFin applies the provisions of Directive 2009/138/EC (Solvency II Directive) and the Insurance Supervision Act applicable since 1 April 2015 along with the Delegated Regulation, implementing technical standards and the EIOPA-guidelines.