EIOPA calls for principle based regulation of cloud computing

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published its Report on "Outsourcing to the Cloud: EIOPA's Contribution to the European Commission Fintech Action Plan".The European Commission's FinTech Action Plan requested that the European Supervisory Authorities (ESAs) explore the need for guidelines on outsourcing to cloud service providers by the end of the first quarter of 2019.In the European financial regulatory landscape, the purchase of cloud computing services falls within the broader scope of outsourcing. For the (re)insurance sector, the current Solvency II regulatory framework includes measures on outsourcing to ensure it does not impact the financial stability and policyholder protection objectives of the framework. EIOPA's guidelines on System of Governance provide some further principle based guidance.Cloud computing is a fast developing service. Based on a survey conducted by the National Supervisory Authorities (NSAs), it is not yet extensively used by (re)insurance undertakings. It is used mainly by newcomers, within a few market niches and by larger undertakings for non-critical functions. However, as part of their wider digital transformation strategies many European large (re)insurers are expanding using the cloud.