Solvency II: EIOPA publishes Public Working Draft 3 of EIOPA Solvency II 2.8 Taxonomy

In the latest event of the series Taxonomy meets the market on 08 February 2023 , EIOPA  presented the latest developments of the technical requirements for the upcoming Solvency II submission, but also for the other reporting standards governed by EIOPA.

The main point, regarding Solvency II reporting is that even though the final version of taxonomy 2.8, including validations, was expected in January, a public working draft of version 3 version was published instead. The new date for EIOPA to publish final version of taxonomy 2.8 is now 17 Мarch 2023.

However, several problems with the PWD3 have already been reported by various market participants during the day, so it is likely that another public working draft will be published before the final version.

The multiple issues are likely a result of the change of the internal systems used by EIOPA to create the taxonomy files. The purpose of this change is to harmonize the technical and business developments of each new taxonomy and to make the overall process less error prone. As a result of the changes the format of the excel file that EIOPA published for each taxonomy – DPM Dictionary, Solvency 2 Annotated Templates, Solvency II List of validations – has been changed. During the event, several software providers pointed out that changing in excel format would cause technical problems for them. EIOPA’s position on this is that XBRL taxonomy is leading and is meant to be the single source of truth, and the excel representations can change format.

It is important to underline that our service does not use any of the excel outputs published by EIOPA, but the XBRL taxonomy files. Therefore, the changes to the software used by EIOPA will have no impact on our processes and timelines for adopting the taxonomy 2.8 once the final version is released by EIOPA.

‍

Changes in 2.8 PWD3

The actual changes published in PWD3 are  mainly focused on the first publication of validations checks for taxonomy 2.8. In total, the book contains just over 5500 validation checks, of which about 4000 are blocking, divided as follows:

• Existing validations that are valid in the new framework (48% of the total)
• Existing validations that had to be modified due to changes in the templates (33% of the total)
• New validations (19% of the total), including:
  • Existing validation checks implemented for new templates
  • New validation checks for existing templates
  • New validation checks for new templates

‍

When it comes to the actual reporting templates, the changes compared to the previous version 2.8 PWD2 are very limited and mostly technical.

The total  changes for 2.8, compared to previous taxonomies are:

• 800 new validation checks
• About 80 revised, 40 new and 30 removed templates
• 190 unique tables
  ‍

The main changes to the templates, as  discussed in PWD 1 and PWD2, are:

• Re-design of cross-border reporting
• Amendments to the list of assets
• Introduction of climate-related reporting
• New cyber risk templates
• Changes to internal models templates
  ‍

Other regulatory issues discussed during the event:

• Revised Reporting package following Level 1 and Level 2 proposals under the Solvency II Review: the consultation is pending political discussions and so far the application date is still unknown.
• New reporting supervision for Financial Conglomerates under development, effective end of 2023;
• Revised Decision on IORP Reporting decision, effective January 2025.
• Further business changes are expected, but are still under discussion or  depend on legal reviews of primary legislation:
  • Potential use of taxonomy for the templates for reporting by US entities under the EU-US Reinsurance agreement – under discussion;
  • Potential use of taxonomy for collection of uniform and comprehensive insured loss data (EIOPA AWP2 2023 foresees EIOPA will develop ways to improve such collection -planning to be decided);
• EIOPA is working to synchronize the development of the taxonomy across EU institutions, and is investigating the possibility to implement validations checks also for CSV, to meet the EBA objectives.

What does it mean for you?

• Taxonomy 2.8 aimed to be available through the cleversoft CSR supervisory reporting system before the summer. We had originally planned to make the final version of taxonomy 2.8 available immediately after annual reporting in April. However, due to the latest developments it is likely that the timeline will be postponed. We remain committed to releasing the final version as close as possible to the original timeline.
• The changes to the formats of the excel files published by EIOPA do not affect the timing or processes for Solvency II Service. All files we use are generated based on the Solvency II XBRL taxonomy published by EIOPA.