Bermuda Targeting Full Solvency II Equivalence
The European Commission has published its first Solvency II third-country equivalence decision on 5 June 2015.
Switzerland has been granted full equivalence in all three areas of Solvency II, namely solvency calculation, group supervision and reinsurance. The decision also granted equivalence in the area of solvency calculation for a period of ten years to Australia, Bermuda, Brazil, Canada, Mexico and the USA. These decisions will be considered by the European Parliament and the Council for approval.
Jeremy Cox, CEO of Bermuda’s regulatory authority, the Bermuda Monetary Authority (“BMA”) noted that “this is good for Bermuda but it is not the complete and final result we seek.” The BMA has indicated that it intends to seek full equivalence in all three areas. The BMA further stated that it expects to have all measures in place by the end of June 2015 to provide for full equivalence with Solvency II and further expects a decision on its application for full equivalence between Q3 2015 and Q1 2016.
The full text of the European Commission delegated decision can be found here. The European Commission’s press release on the decision can be found here. For the full text of the BMA’s news release on equivalency, please click here.
Six Committee Implementing Regulations have come into force
Six Committee Implementing Regulations have come into force and were published in the Official Journal of the European Union. These regulations set out the implementing technical standards (“ITS”) in respect of Solvency II. Each of these regulations came into force on the day following their publication. These regulations set out the processes for approval by national supervisory authorities concerning:
- the establishment of special purpose vehicles (for the full text of this regulation, please click here).
- the application for permission for group internal models (for the full text of this regulation, please click here).
- the process for reaching a joint decision on the application to use a group internal model (for the full text of this regulation, please clickhere).
- the approval of the application of a matching adjustment (for the full text of this regulation, please click here).
- the procedure for granting supervisory approval for the use of ancillary own-fund items (for the full text of this regulation, please click here).
- the procedure to use undertaking-specific parameters. (For the full text of this regulation, please click here).
Central Bank held Solvency II forum
The Central Bank held a Solvency II Industry Event, which drew over 300 attendees. Cyril Roux, Deputy Governor at the Central Bank of Ireland delivered the opening remarks at the forum. He identified governance, risk assessment and reporting as the “manifest improvements” brought about by Solvency II. He also emphasised that it would bring greater freedom for insurance undertakings to invest policyholders’ money in a variety of asset classes. He noted however that he considered the capital requirements of Solvency II to be problematic as they are “clearly too complex”.
There was also an address by Sylvia Cronin, Director of Insurance, on the state of preparedness of Irish undertakings for Solvency II implementation and Gabriel Bernardino delivered the keynote speech of the forum, in which he discussed the future of insurance supervision and challenges for Ireland.