July 11, 2011 by Canadian Underwriter
Insurance companies are being encouraged to continue working towards a Jan. 1, 2013 Solvency II implementation date, even though The Council of the European Union has proposed a delay of the final Solvency II deadline until January 1, 2014.
Solvency II is an updated set of regulatory requirements – including capital requirements – for insurance firms operating in the European Union.
The Council of the European Union discussed in June a proposal to delay the January 2013 implementation date, although this is still in the discussion stage and has not been ratified. A delay would mean current capital and solvency requirements (Solvency I) would continue to be applicable throughout 2013.
If the council reaches an agreement on the issue, the European Parliament would have to formally adopt the proposal as part of the Omnibus II Directive. A KPMG Advisory notes this is not likely to happen until at least January 2012, when the European Parliament and Council is expected to address Omnibus II.
“Advice from the industry experts is for insurance companies across the European Union to continue working towards the current deadlines and not to delay their plans for Solvency II implementation,” says the International Cooperative and Mutual Insurance Federation.
The federation goes on to quote Paul Clarke, the global head of Solvency II for PricewaterhouseCoopers.
“It is unlikely the issue will be fully resolved until later this year, so it is vital insurers press ahead with their current plans and timetable,” Clarke is quoted as saying. “Any distraction now could prove potentially costly in the long run.”
KPMG’s Advisory observes that news of a potential delay may not please companies that were likely to meet the current January 1, 2013 deadline.
“While many in the industry will welcome the delayed implementation, there is a significant proportion of companies that have invested heavily in preparing for the original deadline and would now prefer to move quickly to the new regime,” says Phil Smart, UK head of Solvency II at KPMG.
This is especially true “when one considers the huge effort that is being applied by some companies into the development of their internal models,” The KPMG Advisory notes. “These companies have been working towards internal model approval and are now keen to begin seeing a return on their investment.”