In a wide-ranging opening speech at the 2nd Annual EIOPA Conference in Frankfurt this morning, chairman Gabriel Bernrdino had the following to say about the Solvency II situation:
"In first place, we need a strong commitment from the EU political institutions towards the implementation of Solvency II. This should prompt the definition of a clear and credible timetable based on a realistic assessment of the expected time needed to deliver the different milestones of the regime.
Secondly, we need to agree on a sound and prudent regime for the valuation of long term guarantees. A regime that preserves the risk-based economic approach on the valuation and assessment of risk and that adequately captures the characteristics of certain long-term liabilities with sufficiently predictable matchable cash-flows.
This should be viewed as an opportunity to continue to offer long-term guarantees to consumers, but under a robust framework that would price correctly any options embedded in the contracts. The new regime should not work as an incentive to maintain unsustainable practices and products that are already challenged by the economic reality.
We welcome the role that the EU political institutions are willing to attribute to EIOPA on the assessment of the long term guarantee package and we hope to receive a clear mandate within the terms of reference in order to start the assessment as soon as possible.
Thirdly, even if a credible timetable will probably point out to an implementation date not earlier than 2016, it should be possible in an interim phase to start to incorporate in the supervisory process some of the key features of Solvency II, namely some elements related to Pillars 2 and 3. EIOPA is exploring this possibility, based on its powers under the EIOPA Regulation. This interim phase should be coordinated by EIOPA in order to ensure a consistent application throughout the EU.
Solvency II has been viewed internationally as a reference in risk-based regulation of insurance. In that sense many countries have considered elements from Solvency II while developing their own regimes. The lack of certainty about Solvency II implementation is challenging the EU credibility in the international discussions."
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