The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has published the first of its Level 3 guidance for Solvency II, on the pre-application process for internal models. Coming soon after the publication of its final Level 2 advice, this marks a shift of focus on to delivering Level 3 guidance for all areas of Solvency II.
Although the pre-application process is voluntary, CEIOPS states that it is beneficial both for undertakings and supervisors to have a consistent internal models pre-application process, which would facilitate the introduction of a balanced internal models approval process.
In particular, it says the pre-application stage to the approval process will assist undertakings by giving them the opportunity to liaise with their supervisory authorities as they develop their internal models, and will allow them to obtain an early indication on their preparedness to apply for approval.