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.
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.
In March/April 2014, the European Parliament and the European Council approved the so-called Omnibus II Directive which completes the framework directive and will allow the new regime to enter into force as of 1 January 2016.
The Commission is now preparing the next stage of implementation of Solvency II, which will be the adoption of a Commission Delegated Act containing a large number of detailed implementing rules planned for September of this year. AMICE is actively involved in providing comments on draft versions.
EIOPA, the European Insurance and Occupational Pensions Agency, is charged with developing regulatory technical standards (standards for the consistent harmonisation of rules in EU legislative acts ), implementing technical standards (standards for the uniform application of legally binding EU acts) and guidelines for the implementation of Solvency II in the Member States.
The implementing technical standards will cover, as proposed in the Omnibus II Directive, the uniform reporting templates, harmonised technical input to the standard formula, harmonised procedures and templates for cooperation and the exchange of information between supervisory authorities. EIOPA can issue guidelines to supervisors and undertakings which are not legally binding, but companies or supervisors not complying will have to explain their reasons. Again, AMICE is actively involved in commenting these drafts on behalf of the sector.
Within AMICE, the work on Solvency II is carried out in the Solvency II working group of the Advocacy Commission. On issues of governance, the Regulatory Affairs working group provides additional input. 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. supplementary calls for contributions, subordinated debt);
proportionality in the three pillars (valuation of technical provisions and calculation of the solvency capital requirement, the governance requirements, the ORSA process, and reporting and disclosure);
groups (horizontal groups).
On other issues, AMICE cooperates closely with Insurance Europe, the European insurance and reinsurance federation, with the aim of identifying coordinated positions among Europe’s insurance industry.