On 31 October 2012, Solvency II’s transposition date and implementation date were changed to 30 June 2013 and 1 January 2014, respectively. Due to on-going discussions about the Omnibus II Directive, these dates were brought into effect by a short directive amending Solvency II. This is not, however, going to be the last amendment to those dates.
On 4 October 2012, in correspondence to Michel Barnier (the European Commissioner, Gabriel Bernardino (Chairman of EIOPA) underlined EIOPA’s strong concerns over the delays caused by the Omnibus II Directive negotiations. Mr Bernardino highlighted the impact that this is having on the Solvency II project. Mr Bernardino also noted EIOPA’s concern over the lack of a clear and credible timeline for the implementation of the Solvency II regime.
In his response to that letter Mr Barnier asked EIOPA to advocate a list of best practices (in the form of opinions) that will ensure a common level of preparation, both of national supervisors and firms. Mr Barnier rejected the idea of making some parts of Solvency II legally enforceable before others, however, as his view was that this would add to the length of the legal process.
In December 2012, EIOPA published its opinion on interim measures regarding Solvency II. EIOPA identifies key areas that need to be addressed to ensure proper management of undertakings. EIOPA will also publish guidelines addressed to national supervisory authorities on how to proceed in the interim phase leading up to Solvency II. Any such guidelines issued by EIOPA will be subject to a comply or explain procedure.
The Central Bank of Ireland (CBI) has, on foot of EIOPA’s opinion, provided a qualified indication that elements of Solvency II will be introduced by 1 January 2014 (though we think that it is unlikely that the CBI will proceed on this date unless there is consensus at EU level to do so). These elements will primarily, but not exclusively, be “Pillar 2” requirements. The CBI has helpfully summarised the aspects of Solvency II that will be put in place by that date as follows:
- Companies will need to have effective governance and risk-management systems, including prospective assessments of risks based on ORSA principles
- The CBI will continue to engage with companies that are participating in the pre-application process for internal models
- The CBI will request relevant information for applying a prospective and risk-based approach
The CBI has also confirmed the expected timetable for the assessment of long-term guarantees. The assessment process will launch on 28 January 2013, with participating companies being expected to submit their results to their regulator by 31 March 2013. It is hoped that EIOPA will then be in a position to submit its report to the European Commission on 14 June 2013. If this timetable is adhered to, the European Commission hopes to have submitted its report to the co-legislators (including the European Parliament) on 12 July 2013.
While recent updates have been helpful, uncertainty persists as to when companies will receive a clear timetable for Solvency II’s full implementation. With the European Parliament’s plenary session to consider Omnibus II being scheduled for 10 June 2013, this obviously pre-dates the date that the European Commission’s report on long-term guarantees is expected to be submitted to the European Parliament. On this basis, it would seem unlikely that the plenary session on 10 June 2013 will result in a timetable being agreed for full implementation of Solvency II.