Stand:updated on 06.04.2021 | Topic Solvency Applications for approval of the volatility adjustment
Insurance undertakings that wish to apply for approval to use the volatility adjustment will find an application form here along with information on the legal requirements.
Application
Since 1 April 2015, undertakings have been able to submit applications to BaFin for approval to use the volatility adjustment.
Application form
The application form for approval to use the volatility adjustment includes 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.
When assessing the applications, BaFin especially applies the provisions under § 26 para. 3, 4 and 7, § 27 para. 6, § 40 para. 3 and § 82 VAG which implement the provisions under Directive 2009/138/EC (“Solvency II Directive”) and the relevant EIOPA-Guidelines.
Details on the approvals
Any approval granted to apply the volatility adjustment lapses if the volatility adjustment is not used over a period of 12 months. A new application must be submitted if a further application of the volatility adjustment is intended after this.
Approvals to use the volatility adjustment are not subject to a time limit. No partial approval is granted solely for individual currencies. However, the volatility adjustment can be applied when determining the technical provisions of insurance and reinsurance obligations in individual currencies.
Reporting obligations
If the undertaking is granted an approval it must notify the supervisory authority of any future changes in the scope of application, the explanations upon which the application is based, or in any action plan that may have been submitted. The supervisory authority must also be notified (with the reasons for the decision) if the volatility adjustment is not applied following a previous application of the adjustment. The same applies in the event that the volatility adjustment is due to be applied again following a prior failure to apply over a period of less than 12 months.