The European Parliament plenary meeting to consider, and hopefully approve, the Omnibus 2 amendments to the Solvency II directive has been moved back from 10 June to 22 October 2013. Whilst no explanation of the rationale for the delay has been announced, this delay will allow the results of the current impact study on the impact of Solvency II on products with long-term guarantees to be considered and, where applicable, resulting amendments to the legislation to be drafted.
The study was launched last month, with the European Insurance and Occupational Pensions Authority (‘EIOPA’) due to provide its findings to trilogue parties by 14 June 2013, with the Commission expecting to draft its own report for co-legislators by 12 July 2013. It has therefore been clear for some time that the plenary session would need to be delayed.
Peter Ott, European Head of Solvency II at KPMG, commented: “Whilst we have been expecting for some time that a delay would be inevitable, it is disappointing that the opportunity has not been taken to provide a clear timetable for the remaining process to make Solvency II a reality. European insurers are ostensibly fatigued by the many delays that have happened throughout the last decade and the discussions whether the Directive will ever become a reality in its current form are becoming more intense. A clear timetable is needed on the remaining steps to industry compliance.”
Janine Hawes, Insurance Director at KPMG, added: “Yesterday’s rescheduled plenary vote means that a second ‘quick fix’ directive will need to be put in place quickly, as the transposition of Solvency II into national legislation by 30 June 2013 is clearly impossible. This will amend both transposition and implementation dates and will therefore end the speculation around the actual implementation date. Given the process that will be required to put the level 2 and 3 requirements in place once Omnibus 2 is finally enacted, we are working on the assumption that industry compliance will be moved to 1 January 2016.
What will now be critical for insurers are EIOPA’s proposals for the interim period. In December, EIOPA published its opinion regarding procedures that supervisors should put in place from 1 January 2014 and is due to follow this with guidance in the spring of this year. The focus is heavily on the pillar 2 requirements of Solvency II such as governance, risk management and ORSA principles, so insurers should continue to further develop and stabilize these areas throughout this year. ”