In light of discussions in Europe about splitting the implementation dates for Solvency II, the FSA has revised its planning assumptions. It is now proceeding on the basis that:
- 1 January 2013 remains the date at which the responsibilities of supervisors and the European Insurance and Occupations Pensions Authority (“EIOPA”) will be switched on; and
- 1 January 2014 is when the Solvency II requirements will be switched on for firms.
These assumptions will only be revisited if there is a significant change in the dates to beyond 2014. The proposed Omnibus II directive, which will establish the timescale for implementation of Solvency II, is now not due to be considered by the European Parliament until its February 2012 plenary session.
Despite the uncertainty about the implementation dates, and the fact that there are still issues to be resolved at the European level (including the approach to groups, equivalence, reporting and transitionals), the FSA intends to press ahead with implementation in a way which will balance its regulatory obligations with the needs of the industry.
The FSA’s approach to implementation depends on whether a firm intends to use the standard formula or an internal model.
For firms using an internal model, there will be a full briefing in early November 2011 in which the FSA will deal with its approach to application and the transition from the current individual capital adequacy standards regime to Solvency II. The FSA currently plans to receive applications from 30 March 2012, with formal approvals being provided once Solvency II comes into effect on 1 January 2013. Firms will be allocated a submission slot between 30 March 2013 and mid-2013, depending on factors including an assessment of firm readiness, group issues and policy developments.
For firms using the standard formula, the FSA expects to be open to receive applications from 1 January 2013 for approvals required by firms from 1 January 2014.
The FSA is yet to consider its approach to regulating firms that fall outside Solvency II.