The second Solvency II Industry Readiness Survey was issued by the Central Bank of Ireland’s (the “Central Bank”) dedicated Solvency II team on 1 September 2011. Consisting of over 70 questions, the survey addresses areas such as implementation, planning, training and communications, internal models, ORSA, QIS5 and reporting and disclosure, amongst others. According to the European Insurance and Occupational Pensions Authority (“EIOPA”), the aim of the survey is to highlight areas requiring attention from both firms and supervisors in preparing for the implementation of Solvency II.
The survey was sent to persons identified as the Solvency II responsible person in over 280 insurance and reinsurance undertakings in Ireland. Completed responses were submitted by 216 firms and 29 firms indicated that they would not be submitting a response on the basis that they were not actively preparing for Solvency II. The Central Bank has noted that approximately 40 undertakings failed to respond to the survey and that such undertakings will be pursued by the Insurance Supervision Team in order to obtain an updated picture of their Solvency II preparations.
The results of the survey have been summarised to determine overall industry readiness for Solvency II and also to assess firms’ readiness at an individual level. The following are a sample of some of the key findings and themes of the survey as presented by the Central Bank at the Solvency II Industry Forum on 29 November 2011:
- 73% of undertakings surveyed stated that they are ‘quite confident’ that they will be sufficiently prepared to meet the Solvency II requirements by 31 December 2012;
- 65% of undertakings surveyed stated that they were ‘quite confident’ that the existing governance structures within their organisation comply with the Solvency II requirements;
- When asked about the approach undertakings would take to build new systems required for IT and disclosure in order to meet new reporting requirements, 82% stated that they would use current reporting systems and make necessary updates and changes to factor in the revised Solvency II requirements, compared to 18% of undertakings who stated that they would develop a new system based on Solvency II reporting and disclosure requirements;
- 83% of undertakings surveyed stated that they were ‘quite confident’ that the Central Bank will be sufficiently prepared to undertake the supervisory review under Solvency II effectively and appropriately for their organisation.
The European Parliament has revised its indicative timelines for the adoption of the Omnibus II Directive (which itself amends the Solvency II Directive and contains the proposed revised start date for the Solvency II Directive). Following an update of the European Parliament's procedure file, the vote at ECON Committee on their report on the Omnibus II Directive, which was initially scheduled for 20 December 2011 and then postponed until 24 January 2012, is now scheduled for 21 March 2012. This may indicate that more time is needed by ECON to discuss the key issues surrounding the implementation of Solvency II.
In the absence of any amending directives, Solvency II would technically go live on the original intended date of 31 October 2012. However, it appears that the Central Bank is currently working on the assumption that Member States will be required to transpose the Solvency II Directive by 1 January 2013 and that Solvency II will enter into force for undertakings on 1 January 2014. The European Commission has recently publically stated that the implementation date of Solvency II will be 1 January 2014. However, the Central Bank has stressed that the phased implementation of Solvency II should not be interpreted as meaning undertakings have an extra year to prepare for Solvency II. 2013 should be viewed as a transition year between Solvency I and Solvency II.
Latest EIOPA Public Consultation Papers
Consultation on Guidelines for the Own Risk and Solvency Assessment
In November 2011, EIOPA launched a public consultation on Guidelines for the Own Risk and Solvency Assessment. The consultation is aimed at having valuable insights, supported by quantitative and qualitative evidence, on the impacts, costs and benefits to support the decision-making process for this consultation paper on guidelines on ORSA. The consultation paper also seeks stakeholders' views on the potential impact ORSA could have on the pricing, design and availability of insurance products, the corresponding effects for consumers and the wider social or economic impacts even if indirectly.
Comments from all interested parties, on any aspect of the paper and in particular on the specific questions summarised in Annex II of the consultation paper, must be submitted by 20 January 2012.
For more information see: EIOPA: Consultation Papers.
Consultation on Supervisory Reporting and Public Disclosure
On 8 November 2011, EIOPA launched a consultation paper on the proposed guidelines for Supervisory Reporting and Public Disclosure. Building on the feedback EIOPA received in respect of Consultation Paper 58 (EIOPA’s Advice to the European Commission on Level 2), this consultation is part of EIOPA’s efforts to undertake extensive work to further discuss and improve the proposals for Solvency II Reporting, in particular Quantitative Reporting Templates. Two rounds of informal consultationhave been carried out on this topic with major European stakeholders (CEA, AMICE, CRO Forum, CFO Forum, FEE, Groupe Consultatif) from April to August 2010, and from January to March 2011.
According to EIOPA, feedback from these informal consultations has been taken into account by them in order to provide for this public consultation a largely stabilised package on topics which have already been extensively discussed. The draft proposal on Quantitative Reporting Templates is being submitted for consultation, as it is realistically expected that the Omnibus II Directive will provide for implementing technical standards in this area.
All market participants and insurance and reinsurance stakeholders are encouraged to participate in the consultation as the decisions made will impact directly on the reporting requirements under Solvency II. Comments from all interested parties must be submitted by 20 January 2012.
For more information see: EIOPA: Consultation Papers.