At a meeting on 2 December the Council of the European Union adopted the draft Framework Directive text of Solvency II which deletes/excludes the group support regime referred to in last month's Tracker. The group support regime previously included in Solvency II proposals provided for assessment of an insurance group's risk and capital on a pooled basis subject to supervisory approval.
Immediately following this, the European Insurance and Reinsurance Federation (CEA) called for discussions between the European Commission, the European Parliament and the Council of the European Union to reassess this issue and reach agreement on a group support regime. The CEA is reported to have serious misgivings about the removal of this fundamental building block of the Solvency II initiative.
It remains to be seen what the outcome will be, as the European Parliament is expected to vote on the CEA's draft report on Solvency II in the early part of 2009. The Directive cannot be formally adopted in its current form until it is agreed with the European Parliament.
The amended text, which excludes group support, is opposed by the European Commission, headed by Charlie McGreevy. The removal of the group support provisions reportedly came in response to concerns raised by certain EU Member States that the regime would result in smaller Member States having little supervisory power over large cross-border insurance groups.