Insurance Europe appreciates the clarity provided to the insurance industry this week by the European Commission’s proposal to postpone the date from which the Solvency II regulatory regime will apply. Given the continuing discussions on the Omnibus II Directive, which will amend Solvency II, it had become clear that the current application date of 1st January 2014 was no longer workable.
“Insurance companies will have very little time between the likely finalisation of the delegated and implementing acts that provide important details on technical matters under Solvency II and today’s proposed new application date of 1st January 2016,” said Michaela Koller, director general of Insurance Europe. “The timetable will be very challenging for insurers and supervisors and will likely lead to a significant increase in costs for the industry in preparing for and complying with the new regime. Nevertheless, Europe’s insurers remain committed to the current process for finalising the new regime in a way that addresses the outstanding issues, in particular ensuring it captures appropriately the long-term nature of the industry. Europe’s insurers will endeavour to meet the ambitious timetable for implementation that the Commission proposes.”
The first “Quick Fix” Directive in May 2012 postponed the date of transposition of the Solvency II Directive (2009/138/EC) into national law from 31 October 2012 to 30 June 2013 and its date of application to 1st January 2014. Today’s “Quick Fix 2” postpones the date of transposition to 31st January 2015 and the date of application to 1 January 2016.
Paul Clarke, partner and global insurance regulatory leader, PwC, said "The current Directive had a start date of January 2014, which became unrealistic given the slow progress on Omnibus 2. It was widely known that a 'Quick Fix 2' was required to move the date from 2014, and there was concern in the market that a safe date that avoids the need for a 'Quick Fix 3' would have been in the distant future.
The fact that Commissioner Barnier has chosen January 2016 as the start date in this new Directive is encouraging and reflects confidence among the policy makers that a solution to the outstanding long term guarantee issue will be found this year ahead of Parliamentary elections in 2014.
This Directive, together with the European Insurance and Occupational Pensions Authority's (EIOPA) guidelines to apply from 2014, will provide the market with greater confidence about final preparations for a full Solvency II implementation."
Peter Ott, European Head of Solvency II at KPMG, added “At last, the insurance industry can move forward with a clear deadline for Solvency II application. Despite the persistent lack of certainty, most insurers had been working on the assumption that the implementation date would be pushed back to 1st January 2016. This directive makes that official and the industry can now breathe a sigh of relief.”
Janine Hawes, insurance director at KPMG, said “This directive helps to avoid a disconnect between EU legislation and the regulatory regimes being applied in practice. By extending the directive switch-over by a further two years, the long-awaited amendments from Omnibus 2 will be agreed and incorporated into Solvency II, allowing regulatory regimes to move forward.
We also welcome the widened period between transposition and implementation dates, which has increased from six months to 11 months. This will give industry a longer period of legal certainty before full compliance is required. It also allows regulators more time to assess any day one applications such as requests to use an internal model, ancillary own funds or undertaking specific parameters.
Despite this delay to the full implementation of Solvency II, much development work will continue throughout 2014 and 2015, as the recent Guidelines issued by the European Insurance and Occupational Pensions Authority (EIOPA) are adopted.”
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