It's been a while since I last blogged about Solvency II. To be honest, I was bored stiff by the prospect of blogging about another set of delays. And I love this stuff...so if I was getting bored, I thought you were probably bored too.But it seems rude to stop blogging altogether. Especially when the Parliament, the Commission and EIOPA are doing so much to egg us on.First things first: a tussle seems to have developed between the Commission and EIOPA. The Commission, in an apparent attempt to kick the Solvency II can down the road, has asked EIOPA to:
- Check Solvency II's calibration - does it still work, notwithstanding the sovereign debt crisis that's developed since 2009? And
- Alignment - like Basel II½ and Basel III, Solvency II creates incentives that are bound to "encourage" (re)insurers to change their asset mix. But are the incentives still appropriate? And are they fully aligned with the incentives in the banking sphere? (Back in the real world, we already know the answer to that one's "no". But the Commission wants to check.)
In response, EIOPA - which has more than enough to do already - has patiently and publicly:
- Reminded the Commission about its "strong concerns regarding the stagnant Omnibus II negotiations"; and "serious concern[s]about the lack of a clear and credible timetable for the implementation of the new regime";
- "Urge[d] the political parties ... to come up with a sound and reliable timetable for the implementation of Solvency II"; and
- Invited "a reflection ... on the possibility of earlier implementation of some Solvency II elements".
Separately, EIOPA's chairman (Gabriel Bernardino) is reported to have told the Wall Street Journal that political differences between the European Member States mean that Solvency II will probably have to be delayed until 2016 (at least).
- The Parliament - which either has cloth ears, or regards itself as completely hide-bound - has delayed its vote on Omnibus II from November 2012 to March 2013 (EIOPA - we hear you!); and
- The FSA, which initially put its head in its hands - merely updating its Solvency II webpage to report the Omnibus II delay without repeating its earlier assertions that FIRMS MUST STILL prepare for 2014 - has invited IMAP firms to pick their own landing slots (any time before the end of 2015 is fine - you choose!), and started to talk in detail about allowing firms to use their Solvency II models instead of double-running ICAS as well.
Which I'm afraid means this story will (double) run and run. (Sorry.)
The Commission's letter to EIOPA, and EIOPA's reply, are available here and here. The Parliament's legislative procedure file is here. And the FSA's Solvency II webpage and the Julian Adams speech which opens the dialogue about using Solvency II models instead of ICAS are here and here.