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By way of European Parliamentary notice, it has recently been
announced that the plenary vote on the Omnibus II Directive (which
itself amends the Solvency II Directive and contains the proposed
revised start date for the Solvency II Directive) has been
rescheduled and will now take place on 2 July 2012 instead of 17
April 2012 as reported in our previous update.
This change was expected in order to align with the ECON vote on
21 March 2012 and to allow for sufficient time for the negotiations
to take place between the Parliament, the Commission and the
Council of Ministers.
It is important to note, that despite this delay, the Commission
has stated that the overall implementation timetable for Solvency
II remains unchanged, while the Central Bank stated that it is
currently working on the following assumptions:
Solvency II will be transposed by Member States by 1 January
2013;
During 2013, undertakings will be required to report to
national regulatory supervisors on their progress towards full
Solvency II implementation. Companies will also be able to submit
formal requests to national supervisors for specific approvals (eg.
internal models, undertaking specific parameters, ancillary own
funds) where it is intended to use these from the start of full
implementation. It is anticipated that the specific requirements
for companies in 2013 will be outlined when Omnibus II is
finalised;
Solvency II will enter into force for all undertakings on 1
January 2014. The Central Bank has stressed that the phased
implementation of Solvency II should not be interpreted as meaning
companies have an extra year to prepare for Solvency II, and that
2013 should be viewed as a transition year between Solvency I and
Solvency II.
ECON Report on Omnibus II
The European Parliament's Committee on Economic and Monetary
Affairs (ECON) has published its consolidated report of compromise
amendments for Omnibus II. The report sets out the European
Parliament's proposal for the Solvency II Framework Directive
ahead of its discussions with the European Commission and the
Council of the European Union.
A full summary of the report is beyond the remit of this update,
however it is worth noting that the report retains the proposed
split implementation dates and phasing-in requirements for Solvency
II. This, in a nutshell, means that the requirement that Member
States transpose Solvency II into national law by 1 January 2013,
along with the requirement that all companies comply with the
Solvency II requirements from 1 January 2014, remain in effect.
ECON's report also sets out provisions relating to
transitional periods along with a number of proposals relating to
the requirements for equivalence of regulatory regimes (including
an interesting five-year temporary equivalence provision, based on
certain conditions).
While some commentators believe that the report is not
comprehensive enough and may lack 'workable' solutions, one
benefit of the ECON update is that it sets out in clear terms the
European Parliament's framework for Solvency II ahead of the
negotiations between the Parliament, the Commission and the Council
of the European Union. These negotiations are due to take place
over the coming months.
EIOPA voices concerns on Solvency II Timeline
By way of letter to the European Commission, the European
Insurance and Occupational Pensions Authority (EIOPA) has voiced
its concerns regarding the recent developments relating to Solvency
II and, in particular, the delays in finalising the Omnibus II
Directive.
In its letter, EIOPA stressed the importance of agreement on a
clear timeline for the entry into force of Solvency II and it
encourages the Commission, the European Parliament and the Council
of the European Union to take steps to ensure that Solvency II
comes into force in 2014.
EIOPA also noted that it is currently assessing how best to deal
with the implementation delays in the context of its ongoing work
in preparation for Solvency II, but went on to warn that continued
delay could lead to Member States developing individual solutions
to cater for preparation for Solvency II. This, EIOPA said would be
contrary to a single harmonised approach and may hinder the aims of
Solvency II.
In summary, while the effect of EIOPA's letter may not be
evident for quite some time, as one of the core contributors to the
Solvency II framework, its concerns are likely to be considered
carefully.
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