In part 4, the final part of the series on Solvency II, we will look at elements of Title II, III and IV of the Solvency II act.

TITLE II: Specific Provisions for Insurance and Reinsurance

This title covers specific provisions regarding life, and non-life insurance. It also covers provisions regarding community co-insurance; also covered are the provisions regarding the management of claims, conflict of interest, and health insurance as an alternative to social security.

TITLE III: Supervision of Insurance and Reinsurance Undertakings in a Group

The relation of the members within a group of insurance firms is dealt with in Title III and the relation of the entities therein. The directive states that one of those undertakings effectively exercises, through centralized coordination, a dominant i.e. influence over the decisions, including financial decisions, of the other undertakings that are part of the group; the group supervisor’s approval is required in the dissolution of such relationships. In this case the dominant entity will be considered the parent entity and the others as subsidiaries.

This title outlines the cases of application of group supervision:

1. Member States shall provide for supervision, at the level of the group, of insurance and reinsurance undertakings which are part of a group, in accordance with this Title.

2. Member States shall ensure that supervision at the level of the group applies as follows:

1. to insurance or reinsurance undertakings, which are a participating undertaking in at least one insurance undertaking, reinsurance undertaking, third-country insurance undertaking or third-country reinsurance undertaking.
2. to insurance or reinsurance undertakings, the parent undertaking of which is an insurance holding company which has its head office in the Community.
3. to insurance or reinsurance undertakings, the parent undertaking of which is an insurance holding company having its head office outside the Community or a third-country insurance or reinsurance undertaking.
4. to insurance or reinsurance undertakings, the parent undertaking of which is a mixed-activity insurance holding company. Where in the opinion of the supervisory authorities, the responsibility of the parent undertaking owning a share of the capital is strictly limited to that share of the capital, the group supervisor may nevertheless allow for the solvency deficit of the subsidiary undertaking to be taken into account on a proportional basis.