The Solvency II framework directive has finally been agreed and the proposals are expected to be formally passed in the next six weeks by both the European Parliament and the European and Financial Affairs Council (a subset of the Council of Ministers).
Talks, which have been ongoing for a number of weeks, had focussed on two main stumbling blocks; the group support regime and equity market risk. Ultimately, it was agreed that the proposals for group supervision would not be included but could be reviewed three years after the framework is implemented. This is a disappointment to countries such as the UK, Germany and France who had argued strongly in favour of group supervision, particularly given the recent de Larosière report that also recommended such provisions be included in the final Solvency II framework (see our blog here).
The Association of British Insurers also expressed its disappointment on the failure to include group supervision, stating that "an opportunity has been missed to enhance the regulation of groups that operate across borders". The full ABI press release can be found here.
Despite this, the approval of the framework directive does keep the timetable for implementation of Solvency II by 2012 on track.