The European Commission officially proposed a new “go-live” date for Solvency 2 set for 1st January 2016 with a draft Directive (a.k.a. Quick-Fix 2) that was published on 2 October and is giving the necessary, but tight, space to finalise all the details of the new European insurance regulatory framework.
More than one month later, on Wednesday 13 November, with this new delay officially set, a trialogue session between the European Parliament, the Council and the Commission took place and struck an agreement on the Omnibus 2 text.
A plenary vote by the Parliament should now take place around February 2014. There is, indeed, a strong consensus about getting a vote before May 2014 and the European elections. The EU could not afford to have Solvency 2 handled by a new Parliament and a new Commission, with the new people spending additional time to get up to speed on this file.
The new trialogue agreement is also paving the way for the Commission to prepare the implementing measures in 2014, detailing how Solvency 2 will work in practice. FERMA welcomes this agreement as it is taking us out of the uncertainty for the time being at least. This creates a momentum and brings some stability for all the stakeholders involved in Solvency 2: insurers, policyholders, regulators and investors. The timeline is now clear: vote before the election in May 2014 and January 2016 as the “go live” date for Solvency 2.
Beside this legislative work, EIOPA, the European insurance authority released on 27 September its final Guidelines on preparing Solvency 2. The press used to call them “interim measures” but EIOPA always refused to name them in such a way.
The recipients of the Guidelines are the National Competent Authorities (NCAs – i.e. every national regulator that would enforce Solvency 2 at local level). They will find here a framework to prepare the implementation of some Solvency 2 specific parts.
The guidelines are covering the system of governance, the ORSA, the pre-application for Internal Models and how information should be submitted to the NCAs. It’s a “comply or explain” process, NCAs will have 2 months starting January 2014 to comply or explain why they won’t.
FERMA is now aware that the real challenge is the design of the implementing measures, planned for mid- 2014 as confirmed by Michel Barnier, the EU’s internal market and services commissioner on Wednesday 20 November at the EIOPA conference 2013 held in Frankfurt. This is quite a short period of time and FERMA will remain careful on the outcomes of these Level 2 measures, especially regarding the treatment of captives.