This coming year is likely to see the European Commission narrowing its focus to concentrate on measures that it wants to see adopted by the end of its term in mid-2014. Here is a short status report on projects of most interest to FERMAQ members. For more information on EU legislation or FERMA’s activities with European institutions, contact executive manager Florence Bindelle at

Solvency II
This key piece of insurance legislation is now scheduled to take effect in 2014 but looks more likely to start to be implemented in 2016. Currently the EU institutions are considering whether to change the way that the capital requirements are calculated for long-term guaranteed products (principally in the life insurance sector).

Both general and life insurers will not be able to complete their preparations for Solvency II until implementing measures are published by the Commission. Drafts are not expected to be published before May 2013 at the earliest. From an insurance buyer’s perspective, however, the delay in Solvency II implementation is not having a major impact on commercial insurance programmes.

Broker Remuneration
The Commission’s proposal for a revised Insurance Mediation Directive (IMD2), extends requirements for distributors to disclose their remuneration to mass risks, but maintains exemption for business involving large risks. FERMA has noted that the new definition of professional customers will mean that some SMEs will not have automatic access to information about the way their financial adviser is paid. This may unduly affect smaller corporate buyers of insurance and action may be necessary.

Another question is whether loss adjusters, not included in the present draft, should be covered. The European loss adjusters’ organisation FUEDI expects to issue a consultative paper on 1 December.

Corporate governance
The quality of audits especially for public-interest entities, such banks, insurance companies and listed companies, and transparency in financial reporting are matters currently in the spotlight due to EU negotiations on two separate draft directives. Aspects of both sets of proposals are highly controversial and, therefore, negotiations are proceeding gradually.

The Commission plans to introduce a complementary initiative on non-financial reporting by large businesses in the new year. This will include requirements to report on human rights, measures the company has taken against corruption, and social and environmental initiatives.

Natural catastrophes
Following the publication in September 2012 of a study on catastrophe risk relevance and insurance coverage in the EU, the Commission recently confirmed to FERMA members that it is premature to expect legislative activity by the Commission. However, the Commission intends to publish a strategy on adaptation to climate change, which may refer to insurance and other financial coverage, early in 2013.

Industry and the environment
FERMA is preparing a response to a proposal initiated by Hungary for the creation of a compensation fund for environmental pollution from industrial accidents. For more details, see full story on page 5.