On Wednesday 22 April the European Parliament approved the proposed text of the Solvency II directive. The approval should allow for the adoption of the draft text of the framework directive by the Council of Ministers to whom the directive now returns for a final sign-off.
MEPs voted 593 in favour, 80 against with 3 abstentions on the framework directive. The legislative procedure necessary to agree the directive ends with the formal adoption by the Council when the Economic and Financial Affairs (ECOFIN) Council meet on 5 May.
Member states must transpose the directive into law by the 31 October 2012. Two years after the directive comes into force the European Commission (Commission) is requested to make an assessment of whether to improve, if necessary, the application of some aspects of the directive. This will include an examination of the cooperation of supervisory authorities within colleges.
Similarly, in 2015, a “review clause” in the directive requires the Commission to assess the benefit of enhanced group supervision and capital management within insurance and reinsurance groups. At this point the benefits of the proposed group support regime can be reassessed.
The directive proposes that the Minimum Capital Requirement (MCR) should be between 25 and 45 per cent of the insurer’s Solvency Capital Requirement (SCR). The exact amount will depend upon a number of variables specific to the insurer in question.