Insurance Quarterly Legal And Regulatory Update, April - June 2020

• Published date: 15 July 2020
• Law Firm: Dillon Eustace
• Author: Mr Andrew Bates, Keith Waine and Karen Jennings

1. SOLVENCY II

1.1 Implementing Regulation on technical information for calculation of technical provisions and basic own funds for Q2 2020 published in the Official Journal of the European Union

On 13 May 2020, the Commission Implementing Regulation (EU) 2020/641 which lays down technical information for the calculation of technical provisions and basic own funds for reporting from 31 March 2020 until 29 June 2020 under the Solvency II Directive (2009/138/EC) (Solvency II Directive) was published in the Official Journal of the European Union.

The Implementing Regulation sets out the technical information to be used by reinsurers and insurers when calculating technical provisions and basic own funds for reporting with reference dates in Q2 2020.

To ensure uniform conditions for insurers and reinsurers calculating technical provisions and basic own funds, the Solvency II Directive requires that technical information on relevant risk-free interest rate term structures, fundamental spreads for the calculation of the matching adjustment and volatility adjustments must be laid down for every reference date. In each case, the technical information is based on market data related to the end of the last month preceding the first reporting reference date to which the relevant Implementing Regulation applies.

The European Commission adopted the Implementing Regulation on 12 May 2020. It enters into force on 14 May 2020 and applies from 31 March 2020.

The Commission Implementing Regulation (EU) 2020/641 can be accessed here.

1.2 European Court of Justice ruling on insured's right to choose lawyer under Solvency II Directive covers mediation

The Court of Justice of the EU (ECJ) has ruled on a reference for a preliminary ruling concerning an insured person's right under the Solvency II Directive to choose their own lawyer in proceedings relating to a contract for legal expenses insurance in the case of Orde van Vlaamse Balies and Ordre des barreaux francophones et germanophone v Ministerraad (Case C-667/18).

The ECJ was asked to consider whether Article 201(1)(a) of the Solvency II Directive must be interpreted as meaning that the term "proceedings" referred to in the article includes judicial or extrajudicial mediation proceedings in which a court is involved or is capable of being involved.

The ECJ ruled that "proceedings" did include judicial or extrajudicial mediation and held that "...any stage, even a preliminary stage, which is capable of leading to proceedings...