Insurance Quarterly Legal And Regulatory Update
The Solvency II Directive has moved a step closer to implementation following a vote held on 22 March 2012 in which the European Parliament's Economic and Monetary Affairs Committee ("ECON") passed the majority of the Omnibus II proposals.
In its vote, ECON acknowledged the need for a matching premium (or "matching symmetrical adjuster") and for a mechanism that would enable insurers to avoid the forced sale of their assets in adverse market conditions at a time when the insurer's liabilities have not crystallised. Details as to the workings of such a mechanism are yet to be agreed upon.
However, not all issues have been resolved from an insurer-perspective. Under Omnibus II, Member States will gain the right not to recognise equivalent group supervision. While details on general temporary equivalence were established for certain third countries, no reference was made to the "different approach" that is said to be required for the US. The current text includes conditions that the US will be incapable of meeting.
Omnibus II will now be the subject of trilogue discussions between the European Parliament, the Council of Ministers and the European Commission, during the course of which the parties will seek to reach agreement on the final text of Omnibus II. The first such meeting is expected to be held in April, with the plenary vote by the European Parliament expected to take place on 2 July 2012
It is expected that the overall implementation timetable for Solvency II will not change as a consequence of these developments. From an Irish perspective, it is the Central Bank's view that:
- Solvency II will still be transposed by Member States by 1 January 2013;
- During 2013, there will be certain requirements for undertakings to report to supervisors on their progress towards full Solvency II implementation; and
- Solvency II will come into full effect for all undertakings on 1 January 2014.
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