The Committee of Economic and Monetary Affairs of the European Parliament has published a draft report on Omnibus II which includes the proposal that the full requirements of Solvency II should not be implemented until 1 January 2014.
Solvency II is due to be implemented at the start of 2013 but it is proposed that its implementation is delayed due to the lack of preparedness of many smaller insurers and member states’ regulators.
Paul Clarke, global Solvency II leader at Pricewaterhouse Coopers has commented that: “This is a positive development as it brings us closer to ending the distracting debate over whether there will be a delay. Despite the delay in start date, the reality is insurers cannot afford to be complacent with their plans as they will still be required to file Solvency II information over the course of 2013 to prove their readiness. This means insurers will need to have the appropriate systems and processes in place by the end of next year.
The industry is likely to welcome the Parliament and Council’s consensus on pushing back the implementation date to 2014, especially as a lot of the technical detail is still to be finalised. The more crucial piece for the industry now is how the areas of disagreement on some of the Level 2 implementing measures are resolved. We are unlikely to get any clarity on this until autumn and the rules won’t be finalised until well into 2012.”
Peter Vipond, director of financial regulation and tax at the Association of British Insurers (“ABI”), however, has warned that the proposal to delay implementation could lead to added cost for insurers. They commented that “the UK industry has already spent hundreds of millions preparing for Solvency II, and stands ready to meet the January 2013 launch date. This may help some firms, and would certainly help some continental regulators but it is a double edged sword. For example, firms would have to run Solvency I in 2013, and in the UK they may have to renew their individual capital adequacy standard for one year.”