EIOPA published its advice to the European Commission on integrating sustainability risks and factors into Solvency II and Insurance Distribution Directive (IDD).
The secretariat of Insurance Europe also received EIOPA’s letter to the European Commission.
EIOPA’s letter to the European Commission.pdf
On Solvency II, EIOPA considers that insurers need to reflect sustainability in the prudent person principle of Solvency II, in the risk management and actuarial functions, the remuneration policy, and the overall solvency needs. The final advice appears to be broadly in line with the draft advice that was consulted in early 2019.
With regard to the IDD, EIOPA calls for the introduction of a clear reference to ESG considerations in the delegated acts on product oversight and governance (POG) as well as on conflicts of interest, but crucially recognises that ESG preferences have to be considered only where relevant.
Next steps
The Commission will consider EIOPA’s advice, and will most likely integrate amendments on Solvency II already in late 2019, as this is considered to be a key priority and cannot wait for the 2020 review package.