On 14 November 2024, the EIOPA (European Insurance and Occupational Pensions Authority) has published an opinion on the application of the DORA (Digital Operational Resilience Act) to insurance companies in relation to the changes to the Solvency II regulatory framework.
Here are the key points:
- New size thresholds in Solvency II: The Solvency II review raises the size thresholds, meaning the limits above which companies must comply with the regulation. Depending on how these changes are implemented in different countries, this could lead to more companies being excluded from the scope of Solvency II.
- Temporary DORA obligations: Despite being potentially excluded from Solvency II after the review, these companies will still need to comply with DORA starting from January 17, 2025. This could create a transitional period where small companies are subject to DORA requirements, even though they might later be exempt.
- Criticism of disproportionate costs: EIOPA believes that imposing these temporary obligations on small companies is excessive. The associated costs and administrative burdens would not be justified, as they would not significantly enhance the digital resilience of these entities.
- EIOPA’s recommendations: EIOPA calls on the European Commission to take action to prevent small companies from facing disproportionate compliance efforts during the transitional period. It also suggests using Article 9a of the EIOPA Regulation to address this issue.
In summary, EIOPA aims to ensure that small insurance companies are not burdened with unnecessary and costly requirements during the transition between DORA’s entry into force and the application of the revised Solvency II rules.