At the end of last month, the European Commission released its proposal for a Directive whose purpose is to postpone: (i) the deadline for “implementation” by EU Member States of the Solvency II Framework Directive into national legislation; and (ii) the date of its “application”, i.e. the date when the provisions of the Directive (and its implementing texts) become legally binding in all Member States.
In essence, this is the second time that the Commission has had to propose amendments to these dates – the first occasion reflected delays in the legislative process caused by the proposal for the “Omnibus II” Directive. The new amendments are as follows:
- The Solvency II Framework Directive initially contemplated a deadline of October 31, 2012 for Member States to implement the text of the Directive into national legislation. The new proposed implementation date is June 30, 2013 – so, the original deadline has been put back eight months.
- The Solvency II Directive initially contemplated a deadline of November 1, 2012 for the application of the texts. The new proposed date of application is January 1, 2014 – so, the original deadline has been put back 14 months.
- The six-month difference between the new implementation date and the new application date is a phase-in period to grant the supervisory authorities and the (re)insurance sector sufficient time to prepare for the entry into force of the new regime. Further details of this “soft launch” of Solvency II – in the form of “level 2” measures - will follow, and depend on, the adoption of the Omnibus II proposal.
- Postponing the implementation and application dates would have left a legal vacuum between the date of repeal of the (current) Solvency I rules and the date of application of the Solvency II rules. The proposed Directive addresses this point by postponing the date of repeal of Solvency I legislation from November 1, 2012 to January 1, 2014.
- The new, January 1, 2014 date of application will also be the starting date for the five-year transitional period for the recognition of equivalent supervision by third-country authorities.
Although the proposal only amends implementation, application and repeal dates, it is still subject to the usual EU legislative process – albeit as a matter of urgency – and so must be forwarded to the European Parliament and the Council of Ministers. The EU institutions should, however, be able to adopt the proposal promptly since the new dates have been pre-agreed during “trialogue” discussions (Commission, Parliament and Council) on the Omnibus II proposal.