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Versicherungskammer Bayern Versicherungsanstalt des öffentlichen Rechts

Versicherungskammer

Wir, die Versicherungskammer Bayern Versicherungsanstalt des öffentlichen Rechts, üben zum einen als übergeordnete Gesellschaft die Funktion der Konzernholding aus.

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Response to Delegated Regulation supplementing the review of prudential rules for the insurance and reinsurance sector (Solvency II)

12 Aug 2025

Avoidance of unintended cliff effects in Art. 51a of the Draft Delegated Act: Under some circumstances, application of volatility adjustment (VA) can lead to higher best estimate liabilities (BEL). However, the proposed CSSR formula does not consider adequately such cases in which PVBP(BEL) turns negative. The maximization with zero causes a discontinuity with a large jump of the VA at 0 EUR: While a PVBP(BEL) of just 1 EUR leads to a full VA application (CSSR=1), a PVBP(BEL) of 1 EUR suddenly leads to NO VA APPLICATION at all (CSSR=0). This unreasonable cliff-edge effect brings artificial volatility into Solvency II and is contrary to the intention of the VA. As a simple fix of this technical issue, the CSSR should be set to 1 if PVBP(BEL) is smaller than zero.
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