The official timetable for Solvency II will require transposition by member states on 30 June 2013 followed by implementation by firms from 1 January 2014. However, in light of continued disagreement in the trialogue process and the consequent postponement of the European Parliament plenary sitting date for discussion of Omnibus II to November 2012, some voices in the insurance sector, including EIOPA Chairman Gabriel Bernardino, who has recently sent a letter to the trialogue parties in this regard, are questioning whether this timetable is still achievable.
It appears that the main sticking point in reaching agreement on the text of Omnibus II is in relation to the treatment of long-term guarantees under the regime. Insurance Europe has issued a statement in support of an impact assessment on this matter, even if it means a delay to the planned 1 January 2014 implementation date for Solvency II.
On 14 September 2012, the FSA published a report providing interim feedback to firms participating in its internal model approval process ("IMAP”) on the findings of its review of compliance with the requirements of Solvency II regarding the data used in the internal model. The report sets out the FSA’s approach to the data review, a summary of the results, and then detailed observations on the findings (from both general and life insurance firms). The FSA has said that most firms are moving in the right direction towards compliance with the Solvency II requirements on data used in internal models. It has also identified the following key findings:
- although all firms have an established data policy, ensuring a consistent interpretation and application of the policy across the firm remains a challenge;
- most firms have underestimated the time required to embed a group-wide data governance framework into “business as usual”;
- most firms did not apply proportionality by conducting an impact and risk assessment;
- some firms failed to grasp the underlying purpose of a data directory, and nearly all firms struggled with an efficient classification of data within the data directory;
- some firms had difficulty in demonstrating the effective operation of data quality checks, primarily due to a lack of evidence of controls and inconsistent reporting of issues highlighted;
- third party data was not always independently validated; and
- compliance with existing end user computing policies and standards was often inadequate or non-existent, and many firms were implementing complex IT systems without a clear definition of user requirements, design, testing and appropriate controls for effective operation in business as usual.
The FSA has said that it aims to complete its review process by the third quarter of 2013, as per its current Solvency II implementation plan.