1.Supervision shall be based on a prospective and risk-based approach. It shall include the verification on a continuous basis of the proper operation of the insurance or reinsurance business and of the compliance with supervisory provisions by insurance and reinsurance undertakings.
2.Supervision of insurance and reinsurance undertakings shall comprise an appropriate combination of off-site activities and on-site inspections.
3.Member States shall ensure that the requirements laid down in this Directive are applied in a manner which is proportionate to the nature, scale and complexity of the risks inherent in the business of an insurance or reinsurance undertaking, in particular with respect to undertakings classified as small and non-complex undertakings.
4.The delegated acts and the regulatory and implementing technical standards adopted by the Commission shall take into account the principle of proportionality, thereby ensuring the proportionate application of this Directive, in particular in relation to small and non-complex undertakings.
The draft regulatory technical standards submitted by EIOPA in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010, the draft implementing technical standards submitted in accordance with Article 15 of that Regulation, and the guidelines and recommendations issued in accordance with Article 16 of that Regulation, shall ensure the proportionate application of this Directive, in particular in relation to small and non-complex undertakings.
5.The Commission shall supplement this Directive by adopting delegated acts, in accordance with Article 301a, specifying:
the criteria laid down in Article 29a(1), including the approach for calculating the sum referred to in points (a)(iv), (b)(v) and (c)(vii) thereof;
the methodology to be used when classifying undertakings as small and non-complex undertakings; and
the conditions for granting or withdrawing supervisory approval for proportionality measures to be used by undertakings not classified as small and non-complex undertakings referred to in Article 29d.