The most important legislative project for Europe’s insurance industry is “Solvency II”, the major exercise by the European institutions to update the legal framework for the industry. The main aim of the framework is to ensure that insurance undertakings are financially sound and can withstand adverse events, in order to protect policyholders and the stability of the financial system as a whole. “Solvency II” replaces a patchwork of 14 existing European directives, the oldest one dating back to 1964, and introduces a modern, risk-based and principles-based system that also takes account of economic reality by addressing issues of group supervision.
Being a co-decision directive, the Solvency II framework directive was approved by The European Parliament and the European Council in April/May 2009. The final text was published in all official languages on 17 December 2009.
The directive is also a so-called “Lamfalussy Directive”; this means that in “level 1”, the key principles of the new system are set out in the Framework Directive while room is left for implementing measures, still at the European level, in “level 2”. Level 2 measures will be issued by the European Commission after receiving advice from CEIOPS, the Committee of European Insurance and Occupational Pensions Supervisors. During 2009, CEIOPS is consulting in three waves on drafts for this advice. AMICE is taking an active part in these consultations by responding to the consultation papers and by participating in hearings and stakeholder meetings organised by CEIOPS and the European Commission.
Within AMICE, the work on Solvency II is carried out in the Solvency II task force of the Economic and Finance Working Group. Within the scope of the project, AMICE focuses mainly on topics of particular relevance to mutual and cooperative insurers, such as
- Funding issues (e.g. surplus funds, supplementary calls for contributions, subordinated debt)
- Groups (group definition, group benefits, governance in groups)
- Proportionality in particular in pillars III (reporting and disclousre) and II
- Issues of particular relevance (e.g. long-tail non-life, health module, ...)
- Non-proportional reinsurance
- Implementation issues on pillar II (qualitative requirements and rules of supervision) with a view to mutual and cooperative structures
On other issues, AMICE cooperates closely with CEA, the European insurance and reinsurance federation, with the aim of identifying coordinated positions among Europe’s insurance industry.