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Stand:updated on 06.04.2021 | Topic Provisions Applications for approval of transitional measures on technical provisions

Insurance undertakings that wish to apply for approval of a transitional measure for valuation of the technical provisions will find two application forms here along with information about the legal requirements.

Application

Since 1 April 2015, undertakings have been able to submit applications to BaFin for approval to implement transitional measures on the valuation of technical provisions.
Insurance undertakings that wish to submit such an application will find an application form here along with information about the legal requirements. This information relates to the transitional measure for risk-free interest rates in accordance with § 351 VAG and the transitional measure for technical provisions pursuant to § 352 VAG.

Application form

The application forms for approval to use the transitional measure for risk-free interest rates and the transitional measure for technical provisions include a list of the requirements that must be met in making the application. The completed application form must be submitted together with a cover letter and the other documentation required.

Processing of applications

After receiving the application, BaFin will send the applicant a confirmation of receipt and check that the application is complete. If the documentation submitted is not complete, the undertaking is notified without delay about which documentation is missing.

If the application is not approved, the undertaking is informed of the reasons. The undertaking is notified of the approval or rejection in writing. The application procedure is subject to a fee.

In assessing the applications, BaFin especially applies the provisions under § 351 and § 352 VAG which implement the provisions under the Directive 2009/138/EC ("Solvency II Directive") and the relevant supplementary EIOPA-Guidelines. BaFin recommends that undertakings familiarise themselves with the content of these legal provisions and supplementary guidelines should they wish to make such an application.

Details on the approvals

The period of use will be shortened accordingly if an application for use of a transitional measure for the valuation of technical provisions is made during the transitional period (between 1 January 2016 and 1 January 2032). The transitional measure must then be used in the manner that would have been applicable if it had been approved and applied as of 1 January 2016. The undertaking may terminate usage of a transitional measure prematurely at any time prior to 1 January 2032. It is also possible to switch the use of a transitional measure during the transitional period. A new application must generally be submitted in the event of an expansion in the eligible insurance portfolio as a result of a portfolio transfer or merger (pursuant to Article 308c of the Solvency II Directive) or expansion of the homogeneous risk groups that fall under the scope of application (pursuant to Article 308d of the Solvency II Directive).

Application of the transitional measures

The transitional measures can only be applied to insurance obligations for which the associated contracts were entered into prior to 1 January 2016.

If the transitional measure is applied for risk-free interest rates, it must be applied to all insurance and reinsurance obligations that comply with § 351 para. 3 VAG. The contracts defined this way are known as “portfolios of eligible insurance obligations”. They also include the obligations from accident insurance with premium refunds as well as “HUK” pensions (third party/accident/motor vehicle insurance).

Application of the transitional measure for technical provisions to a part of the existing homogeneous risk groups in the insurance portfolio is permissible in accordance with § 352 para. 1 VAG .

Additional information

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