The recovery plan should include the possible measures to restore the financial position. They are drafted at normal times and subject to approval by the national authority in all member states on a regular basis.
The recovery plan should contain the following points:
- Strategic analysis;
- Stress scenarios and corresponding recovery options; and
- Asessment of necessary steps and time and the association risks.
The recovery plan should be required only from the most systemically important insurers. The national authorities should decide which company is subject to the recovery plan based on harmonised criteria. EIOPA proposes the following criteria:
- Business model;
- Risk profile;
- Cross-border ability; and
In order to reduce the administrative burden, the proportionality principle1 should be applied based on harmonised rules.
Existing regulation on recovery
Solvency 2 – recovery foreseen only after the breach of SCR
ORSA – process designed to avoid breaches of SCR – > no need for recovery
1. Bigger and more systemically important institutions face stricter and more stringent requirements than smaller and less systemically important institutions do.