Gabriel Bernardino, the chair of the European Insurance and Occupational Pensions Authority (EIOPA), addressed a capacity audience of the Insurance Institute of London, this lunchtime.

Bernardino’s prepared remarks were reminiscent of previous “land grabs” and will be published shortly.

Bernardino’s answers to audience questions were rather more interesting to most of the participants:

EIOPA seems very confident that the European Parliament will vote to adopt Omnibus II; but the Parliament has just delayed its vote again*. Is EIOPA confident that the Parliament will adopt Omnibus II before it rises for the European Elections? And, if so, why?

EIOPA is “100% confident that it will be done...The political will is there”. It’s just a question of “juggling” the Parliamentary Schedule, and that’s “complicated”.

When will EIOPA publish its Guidelines on Solvency II for third-country reinsurance branches?

I estimate between September and November 2014”.

Is it true that EIOPA is working with the PRA to develop “early warning indicators” for Solvency II and, if so, what form will they take, and when and how will they be made?

EIOPA is working on “ongoing appropriateness indicators”, rather than “early warning indicators”. EIOPA thinks it’s important for supervisors to have indicators which give them “a better idea” of how an internal model is performing. EIOPA hopes to be able to share and test its proposals in the second half of 2014. When its proposals are published, EIOPA will have something to say about how the indicators will be made (i.e. Level 2 or level 3), and where they will sit in the supervisory ladder of intervention.

As these remarks were delivered, they seemed clear and transparent enough; which is just as well because Bernardino had repeatedly told us that EIOPA is a clear and transparent Authority, and that it’s important that we see it in that way. Afterwards, it was clear the audience was far from convinced about this; and looking back at my notes, it’s easy to see why. For example, why is EIOPA developing “ongoing appropriateness indicators”, when they seem to be materially the same as the PRA’s “early warning indicators”? And why has it spent so long engaging in so many “secret” pre-consultation exercises, when transparency would have been so worthwhile?

It’s probably also worth noting the palpable disappointment in the room about the early warning indicators; not just because of the obvious fear that the indicators will materially increase Solvency II’s capital requirements in practice, if not in theory; but because EIOPA may be about to let the PRA off its illegality hook.

  • In the last few weeks, the Parliament has delayed its plenary vote on Omnibus II from 25 February to 11 March 2014. The is the most recent delay in a very long series of delays. The Procedure File is available here.