June 2011 has seen the European Council release three revised versions of the draft text of Omnibus II Directive (“Omnibus II”). Once implemented Omnibus II will make certain amendments to Solvency II.

Omnibus II was originally proposed by the European Commission in January 2011 and proposed certain amendments to Solvency II in light of the Lisbon Treaty. It also contains proposed amendments in light of the recent establishment of the EIOPA (the European Insurance and Occupational Pensions Authority) and proposed a two month delay in the implementation of Solvency II which would see the date for implementation being pushed back to 1 January 2013.

On 28 March 2011 the Council of the European Union published a proposed Presidency compromise text for Omnibus II which amended the original Omnibus II text published in January. This first compromise set out revised deadlines for the submission of draft technical standards by EIOPA and encouraged Member States to prepare and publish a document illustrating how the transposition of Omnibus II is to be achieved.

A Presidency compromise text issued on 7 June 2011 which primarily set out transitional arrangements to apply as between the Solvency I and Solvency II regimes. It also proposed changes to the scope of Solvency II by excluding from its application certain classes of companies namely both closed fund companies that intend to terminate their business within three years of the Solvency II implementation date and closed fund companies which are subject to reorganisation and to which an administrator has been appointed.

Further Presidency compromise texts of Omnibus II issued on 21 June 2011 and was closely followed by another release on 24 June 2011. Among further changes proposed to Solvency II, the most significant amendment is the proposal to delay the implementation of Solvency II even further. It is apparent from these latest compromise texts that the Presidency and certain Member States are now prepared to set 1 January 2014 as the date for implementation, with other deadlines to be re-adjusted accordingly.

This proposed further delay to the implementation of Solvency II is likely to be met with differing views. Whereas for some it will offer welcome breathing space to adjust to the new regime it is likely to frustrate those companies and national regulators who have already begun to address change. Further delays are also likely to add to the cost for insurance undertakings effecting the transition from the Solvency I to Solvency II regime.

Omnibus II must be adopted by the European Parliament and the European Council in order for it to amend Solvency II as it currently stands. As a result the situation is still far from clear. In conflict with the most recent Omnibus II compromise text, for example, the European Commission has repeatedly emphasised that the implementation date for Solvency II will be January 2013. As it stands European Council negotiations are still ongoing and it is anticipated that another compromise text will be released towards the end of 2011.