To read the full edition of the Insurance Newsletter, Autumn 2011, click here.
There has been a significant volume of communications this year
relating to the implementation of Solvency II. In January, the
transitional measures were issued from the European Commission. The
results of QIS5, were published by EIOPA in March, and the results
indicated that insurance companies throughout Europe were getting
to grips with the newly proposed regime under Solvency II, despite
initial fears as to its complexity. In the summer, we saw the
proposal from the European Council and the ECON Committee of the
European Parliament to delay the implementation date to January
2014. The latest development highlights the magnitude and
complexity of the task in hand, both for insurers and the
regulators to approve and implement the new regime.
Latest Timelines
The latest timelines expect a final draft of the Omnibus II
Directive (which itself amends the Solvency II Directive) by the
end of 2011, expected to be adopted in early 2012. Transposition of
the Solvency II Directive into national law is expected to be
required by 31 March 2013 with the revised implementation date now
expected to be set at 1 January 2014. It is
expected that transitional periods will apply thereafter.
Uncertainty remains, however, in relation to the Level 2 text,
which fleshes out the principles set out in the Solvency II
Directive (ie Level 1). A draft consolidated text was made
available earlier this year however, a final consolidated text is
not expected until March/April 2012. The final consolidated text
will be subject to public consultation and approval by the European
Council and Parliament.
Further uncertainty abounds in relation to Level 3, ie the
standards and guidelines. Expected as implementing acts and
technical guidelines, Level 3 documents are currently being
developed by EIOPA working groups but cannot be released for public
consultation until after Level 2 text has been published. As such,
further delays could ensue depending on when Level 2 text is
published.
Latest EIOPA Consultation Papers
Consultation on Equivalence
On 17 August 2011, the European Insurance and Occupational
Pensions Authority ("EIOPA") published
three consultation papers relating to the equivalence assessments
of the Swiss, Bermudan and Japanese supervisory regimes under
Solvency II. The European Commission's Call for Advice on 11
June 2010 asked CEIOPS (EIOPA's predecessor) to provide final
advice on whether the supervisory regimes of certain third
countries satisfy the general criteria for assessing third country
equivalence. In its letter of 29 October 2010, the European
Commission indicated that Switzerland should be assessed for
equivalence under articles 172, 227 and 260 of the Solvency II
Directive and Japan under Article 172.
EIOPA has been invited to provide advice by the end of September
2011, following a full consultation process. The consultation
papers issued by EIOPA set out the methodology adopted in assessing
the regimes in each jurisdiction for the purpose of equivalence.
Comments from interested parties on the three consultation papers
were due to be submitted by 23 September 2011 and the EIOPA advices
are expected late this year/early 2012.
Consultation on the Solvency II XBRL Taxonomy
On 21 July 2011, EIOPA published a consultation paper on the proposed Solvency II XBRL Taxonomy for use in the transmission of Quantitative Reporting Templates ("QRT"). This forms part of EIOPA's efforts to develop harmonized Solvency II QRT in addition to developing an XBRL Taxonomy describing the Solvency II reporting in the harmonised data format to be used for the transmission of QRT. The consultation paper contains a sample of the future Solvency II taxonomy and reports ("Sample Taxonomy"). In August 2011, EIOPA subsequently published two additional documents known as technical descriptions. These are disclosures of the XBRL technology that are proposed to be used for Solvency II reporting.
The purpose of the consultation is to provide evidence and information for quality assurance of XBRL Taxonomy, identify and mitigate of implementation risks (resources, cost, time, etc.) and to investigate mechanisms for XBRL Taxonomy maintenance. EIOPA provided a template for comments to be completed and submitted by interested parties by 7 September 2011. As above, the EIOPA advices are expected late this year/early 2012.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
