On 3 July 2012, despite recent reports of member states asking to have the Solvency II dates pushed back even further, the European Parliament adopted the directive amending the transposition and implementation dates of Solvency II, changing the transposition date for Member States to 30 June 2013 and the implementation date for firms to 1 January 2014. (The text of this directive was published on 29 August 2012 and can be found here.) This removes the concern that regulators and insurers may need to comply with Solvency II by 1 November 2012 but increases the pressure to have Omnibus II key terms settled.

However, trialogue talks between the European Parliament, the European Commission and the European Council held on 12 July 2012 have reportedly failed to reach agreement on Solvency II issues, which could lead to further delay in the passing of Omnibus II. This follows the amendment of the proposed date for the European Parliament to consider Omnibus II in a plenary session to 20 November 2012, announced in late August 2012.

FSA consultation paper

On 11 July 2012, the FSA published a consultation paper (CP12/13) on Solvency II. This sets out proposed rules and guidance on areas that either were not covered or were only partially covered in the previous consultation paper (CP11/22), including how Solvency II may apply to the Lloyd’s market, the FSA’s policy for separate disclosure of capital add-ons, and proposed changes to existing Handbook rules governing with-profits and unit linked business.

Responses are invited by 11 October 2012, after which the FSA intends to collate the feedback from all its Solvency II consultations thus far and aims to publish a Policy Statement in late 2012 or early 2013. The precise timing will depend upon a review of feedback received against the level 2 proposals once they are finalised in Europe and on the legislative timetable for UK regulatory reform and the Handbook. The FSA has noted that, once Omnibus II is adopted and the level 2 proposals are finalised, further consultations may be required.  


On 24 July 2012, Julian Adams, Director of Insurance at the FSA, sent a letter to firms in the Internal Model Approval Process (“IMAP"), which provides an update on Solvency II, gives further feedback from reviews carried out to date, and includes a projected timetable for activity through to the end of 2012.

The letter indicates that the FSA has started receiving submissions from firms in pre-application and that, where the quality of the submissions is sufficient, the FSA expects to be able to form a preliminary view within six months. It adds that, from the time of submissions, firms are expected to apply a formal change process to their models in order to deal with any required alterations. The letter also describes the FSA’s intention to collect data from firms to inform its assessment of their internal models.

In addition, the letter notifies firms that the FSA expects to hold its next Solvency II conference before the end of the year.

EIOPA reports

On 10 July 2012, the European Insurance and Occupational Pensions Authority (“EIOPA”) published its final report on the Reporting and Disclosure Requirements in response to comments received on the Solvency II consultation papers (no. 11/009 and 11/011). The report relaxed some of the burdens insurers had been concerned with respect to Solvency II. The most notable change was with the financial stability information reporting requirement. The threshold to provide financial stability information has increased from 6 billion to 12 billion Euros and the requirement to report technical provisions by line of business for groups has been removed, easing smaller insurers’ reporting burdens. EIOPA also noted that quarterly and annual reporting may result in the same information being reported twice and have thus introduced a split in information between quarterly and annual reporting to avoid needless repetition. A final point to mention is that profit and loss information will now be reported on a semi-annual basis instead of on a quarterly basis.

EIOPA’s final report on Guidelines on Own Risk and Solvency Assessment (“ORSA”) was released on 12 July 2012. Several key points were raised by respondents to the consultation paper (no. 11/008), to which EIOPA has given material responses. One issue involved proportionality and materiality, as respondents have found a lack of detail on where and how these principles are to apply in practice. EIOPA’s response was that “Undertakings are expected to have the necessary competence and expertise to find fit-for-purpose solutions for the practical challenges they face”. Another issue questioned the roles and responsibilities of the Administrative, Management and Supervisory Body (“AMSB”) in ORSA. It has been confirmed that the AMSB is to require a level of expertise to provide “sound and prudent” management of the undertaking and maintain an active role in deciding what actions to take should a critical risk materialise. Respondents have asked EIOPA to have a simplified projection of the forward-looking perspective. Having acknowledged that the requirement to quantify overall solvency needs for each separate year of the ORSA projection period may have been too prescriptive, EIOPA has replaced the existing relevant guideline to have a more appropriate projection of a multi-year tendency and development perspective.

Third country equivalence

On 14 June 2012, EIOPA published a paper on third country equivalence measures for countries that either have a risk-based regime similar to Solvency II or are committed to moving towards such a risk-based regime over a specified period. Although the European Commission will decide which countries should benefit from the proposed transitional regime, EIOPA will provide a technical contribution to assist in the decision-making. As at the date of the paper, Australia, Chile, China, Hong Kong, Israel, Mexico, Singapore and South Africa had expressed an interest in the transitional regime and had therefore received information requests from EIOPA to enable it to carry out an analysis of the differences between Solvency II and the regimes of the relevant jurisdictions.