Today’s approval of the Solvency II amendments directive, Omnibus 2, at the European Parliament plenary session draws to an end the elongated process to establish a new prudential regime for European insurers.
Peter Ott, European Head of Solvency II at KPMG, commented: “After so many delays in reaching political agreement on a modern, risk-based and transparent supervisory regime for insurers, we are very pleased to see this milestone successfully passed. The political certainty that has been given will mean that Solvency II will become a single prudential regulatory rulebook for all insurers operating in the European Economic Area. Work can now continue building on the framework established, knowing that it is finally a stable base to work from.”
Janine Hawes, insurance director at KPMG added: “The two year preparatory phase is already underway, with insurers and supervisors following the guidelines issued by the European Insurance and Occupational Pensions Authority (EIOPA) last year. This period effectively allows firms to take a number of decisions with the benefit of supervisory review but without the threat of action over any deficiencies. Insurers should use this time wisely, for example, to test whether their views of proportionality align with those of the supervisors and to ascertain any likely challenge to approvals they wish to obtain – not just in the area of internal models, but other areas such as the use of undertaking specific parameters, ancillary own funds and group solvency calculation approaches.
“The Commission is expected to formally publish its delegated act proposals in the summer and EIOPA is working on the implementing technical standards to the timetable it published earlier this year. Every effort must be made to finalise these as smoothly as possible to ensure no more bottlenecks emerge.
“Much work still needs to be done, so it is important that all parties make good progress towards the 1 January 2016 implementation date.”
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.