The Strategy for Implementation of Solvency II in Serbia, adopted by the NBS Executive Board on 7 July 2016, envisages phased implementation of Solvency II in the Serbian insurance sector. The NBS completed ahead of schedule the first stage envisaged by the Strategy, during which it carried out:
The results of the in-depth gap analysis show that full alignment with one fifth and partial alignment with one tenth of provisions of the Solvency II Directive has been achieved. The highest degree of alignment was achieved within Pillar II qualitative requirements. Pillar I has not been implemented – alignment is needed with new qualitative requirements relating primarily to the calculation of technical provisions for solvency purposes and capital adequacy. It has been determined that alignment with Pillar III requirements, concerning supervisory reporting and disclosure of pre-defined information by undertakings, will be more important in the implementation phase than during the harmonisation of legislation. It is necessary to establish the group supervision framework in accordance with new rules and adjust the requirements relating to the winding-up of undertakings within the EU.
Under Article 4 of the Directive, small undertakings fulfilling the prescribed conditions, which can operate within a single country and whose licence is not treated as the “European passport”, are excluded from the scope of the Directive. The analysis has shown that all undertakings in Serbia would be covered by Solvency II requirements. According to available information, none of the existing undertakings would be included in the regime for small undertakings.
The analysis of readiness and capacity of undertakings to implement Solvency II included the analysis of implementation of Pillar 2 so far and the analysis of the overall readiness of undertakings to implement Solvency II. The analysis of Pillar 2 implementation was conducted by determining the key functions and the quality of own risk and solvency assessment (ORSA). It has been concluded that there is an adequate degree of readiness and capacity to implement Solvency II in this segment. The analysis of overall readiness of undertakings to implement Solvency II established that the insurance sector in Serbia is considerably focused on implementing Solvency II, that the management of undertakings is, as a rule, involved in its implementation, and that most undertakings believe Solvency II will positively impact their operations. However, undertakings consider that their employees have insufficient knowledge about Solvency II and that there is a substantial need to improve capacities, with the expected help of parent undertakings from the EU and the NBS. Some undertakings that are part of EU groups and thus already have some experience in implementing Solvency II underscore the complexity of Pillar 1, which relates to quantitative requirements.
Based on the conducted analyses, it was established that there are solid preconditions for Solvency II implementation in Serbia. An important test of readiness of the Serbian insurance sector to implement Solvency II will be the quantitative impact study envisaged as part of the second stage of the Strategy, which the NBS is currently preparing.