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Though a number of insurers request more explanations as to where and how the proportionality principle will apply in practice, EIOPA expect that “undertakings have the necessary competence and expertise to find fit-forpurpose solutions for the practical challenges they face. The application of the proportionality principle in practice must be determined on a case-by-case basis”. Although the ORSA is in essence a management tool, not a supervisory tool, a supervisory authority will intervene if it does not consider the process to be proportionate. Some insurers requested that further clarification on materiality should be provided. As per the stance on proportionality, EIOPA has outlined that it is up to each individual insurer, when requested, “to justify to the supervisory authority why the approach taken is proportionate or why certain information or risks are considered immaterial”. Consider proportionality not (only) in terms of size, but in view of the risk profile. This is supported by EIOPA’s view that ORSA guidance does not need a specific approach for captives, mutuals, mono-line undertakings, etc. but that “any undertaking may benefit from proportionality where this is warranted in view of the nature, scale and complexity of the risks they face”.
Source : Deloitte
