EIOPA has published consultation papers assessing the equivalence of the regulatory regimes in Switzerland, Bermuda and Japan with Solvency II. Third countries can be assessed for equivalence under three articles of Solvency II:
- Article 172 on equivalence of the solvency regime applied to the reinsurance activities of insurers with their head office in the third country concerned. Equivalence would allow reinsurance contracts with insurers in that third country to be treated in the same way as reinsurance contracts with EEA insurers.
- Article 227 on third country insurers that are part of EEA groups. Equivalence would allow groups to take into account the local calculation of capital requirements and available capital rather than making calculations using the Solvency II basis for the purposes of the deduction and aggregation method.
- Article 260 on group supervision of EEA insurers with parents outside the EEA. Equivalence would mean EEA supervisors would rely on the group supervision of that third country.
EIOPA’s view is that Switzerland meets the equivalence tests for all three articles, but with certain caveats. It has more reservations about Bermuda, and assesses it as equivalent only in relation to some insurance classes for articles 172 and 227, and makes caveats on all articles. Japan has been assessed only for article 172 equivalence, which EIOPA finds it meets subject to caveats. EIOPA asks for comments by 23 September. When it advises the Commission, its advice must state that the jurisdiction is either equivalent, equivalent with caveats, or needs to make changes to become equivalent. (Source: EIOPA Consults on Equivalence)