Regulatory Alerts2018-12-13
Added · Updated
Key functions with operational independence and proportional set-up
Solvency II insurers must ensure their key functions—risk management, compliance, actuarial, and internal audit—meet three criteria for operational independence: segregation from other functions, non-hierarchical structure, and direct reporting to the administrative and management body. Small and medium-sized insurers may deviate from the segregation and structural criteria if proportionate to their operational complexity, but all insurers must maintain objective independence and cannot deviate from reporting requirements. Insurers are required to document the proportionality of any deviations and substantiate that their governance structure prevents conflicts of interest. Additionally, insurers must conduct periodic evaluations of their governance systems, with frequency and depth scaled according to the insurer's supervisory category.