Ever since it became clear that the ECB would require information from insurers as part of the Solvency II reporting package the question for industry has been: what does the ECB want, and will that mean more data to collect and report?
But before delving into the details and unleashing another reporting solution to devour another chunk of the budget, firms, and their oft-overworked reporting managers, should stop. Pause … and ask themselves these two questions: will ECB reporting apply to me, and if so, who do I report to?
Only then can they begin to understand the full impact of ECB reporting on their work.
What the ECB wants

Unofficial QRTs

Will ECB reporting apply to me?
In line with the Solvency II proportionality and materiality principle, in 2012 EIOPA proposed a number of thresholds for financial stability reporting purposes that exempt smaller entities from the quarterly reporting. At the time it estimated that the thresholds would reduce the number of reporting entities by about 30%. The thresholds are based on size (€12 billion in assets, at Solvency II balance sheet) but are superseded by market coverage (50% of national market share). If the number of firms meeting the size threshold do not make up the required 50% market share, it is up to the National Competent Authority (NCA) to decide which companies will be included in the reporting. However, for prudential reporting purposes, the Solvency II Directive (revised after Omnibus II) states that any exemption given must still cover at least 80% of national market share for quarterly reporting and annual item-by-item reporting. It is therefore possible that firms that would have been exempt from certain financial stability reporting obligations based on the thresholds would still have to provide information for prudential purposes. But the ECB regulation requires coverage of 95% of national market share for annual reporting. Potentially widening the scope of firms that would have to provide data for the ECB. Speaking at an AMICE Solvency II Conference in Paris last December, Ana Teresa Moutinho, Principal Expert on Solvency II, EIOPA, said, “Annually the ECB requires coverage of 95% of the market. This goes beyond the 80% requirement of Solvency II for the minimum annual requirement of item-by-item reporting. Even if NCAs give exemption based on 80% in Omnibus II for the item-by-item reporting, the ECB can still request those undertakings to report to make up 95% of market coverage.”An impact on non-Eurozone countries
Because of the somewhat nebulous nature of the ECB add-ons it is difficult to know exactly which insurers will fall under the scope of the market coverage requirement. For firms based outside of the Eurozone there will be further uncertainty, as the ECB regulation is non-binding in these Member States.
Who do I report to?
Once an insurer establishes that it needs to report they must understand where the data is to be delivered. An important part of EIOPA’s work on reporting has been to ensure reporting entities have a single stream of data that is reported to a single data collection entity (the NCA). To that end, EIOPA has developed the QRTs and the XBRL format. But because the ECB regulation is addressed to national central banks, not NCAs (although in many cases that may be the same body), it is up to the central bank to decide how to collect the data from insurers and deliver it to the ECB.
Details of the ECB add-ons
Understanding the full impact of the ECB add-ons on the reporting workload of insurers goes beyond questions of scope and delivery streams. The nature of the information itself and how it differs from, or adds to, the Solvency II requirements is equally relevant. These should become more apparent with the publication of the “unofficial QRTs”. What follows is a non-exhaustive list that aims to explain the type of information that will be required and some of the challenges of integrating it into the Solvency II reporting package.Issue dates
The ECB is interested in original maturities (information about when the securities and loans were issued), which is not covered by the Solvency II reports. The issue date is needed in order to derive the original maturity of the instrument in addition to the remaining maturity, which is what the Solvency II reports focus on.Using ESA2010 as well as NACE
Solvency II requires the use of a NACE code for asset classification, but NACE is not compatible with the statistical standards used by the ECB’s statistics collection and monitoring system, which uses the European System of Accounts 2010 (ESA2010). Insurers will have to provide the ESA2010 classification in addition to NACE for certain assets.Information on pillar 2 pensions
The ECB will also require information about employment-related pensions (so-called pillar 2 pensions). This is further split by defined benefit, defined contribution and hybrid pensions. However, the ECB source said that the requirement was not yet finalised and that the ECB was still in discussion with national central banks on how to deliver this information.Home vs host approach
One area where the ECB has conceded it may not get the information it wants is in the treatment of reporting data of foreign branches.
Reporting timelines (almost) fully aligned
A further reduction in the reporting burden has been achieved by aligning the reporting timelines of the two institutions. For those entities that have to report quarterly the timelines are identical: 8 weeks after quarter end in 2016, gradually reduced to five weeks by 2019. Annual reporting will have the same duration: 20 weeks in 2016, gradually reduced to 14 weeks by 2019. But the reference point for reporting the data is different. While Solvency II reporting begins after the undertaking’s financial year end, the ECB timeline begins after year end. In the relatively small number of cases in the Eurozone where this is relevant, the national central bank will discuss the reporting modalities with the insurance firms.Group data and P&L on the horizon
The ECB requirements only apply to solo undertakings, but as it already indicated in 2013, it would like further information still. “The ECB is interested in having more data on the insurance sector in the future, for instance group-level data and also profit and loss accounts.” There are more items on the list, but for now industry will have some respite as any potential amendment of the statistical requirements aren’t planned before the second half of 2016. The amendments will also be subject to a detailed merits and costs assessment, where the user requirements are assessed and weighed against the costs of producing such new statistics. But the ECB source emphasised, “Two of the highest ranked future requirements are the group data and profit and loss.”Integration into the reporting stream
With the publication of the recent ECB regulation we now know what the ECB wants and what elements are additional to the Solvency II reporting requirements: the so-called ECB add-ons. What we don’t yet know is quite how the ECB add-ons will be integrated into the Solvency II reporting stream and, in some cases, exactly which insurers they will impact. — To subscribe to the Solvency II Wire mailing list for free click here. [caption id="attachment_1582636" align="aligncenter" width="600"]