The European Insurance and Occupational Pensions Authority (EIOPA) has published today an Opinion on the use of risk mitigation techniques by insurance undertakings.
Since the implementation of Solvency II new risk mitigation techniques such as new reinsurance structures have appeared in the European market and some existing ones started to gain more relevance. The Opinion therefore addresses the use of risk mitigation techniques and includes a set of recommendations addressed to national competent authorities (NCAs) to ensure convergent supervision.
Risk mitigation techniques and, in particular reinsurance, are efficient tools for insurance and reinsurance undertakings to manage their risks according to their strategy and capacity. They are used to mitigate risks and to enhance capital management by diversifying risks. The sound mitigation of risks is recognised in the calculation of the Solvency Capital Requirement.
This Opinion raises awareness about the importance to have a proper
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