European Commissioner Michael Barnier has put forward a draft directive to postpone the Solvency II start date to 1 January 2016.
Barnier explained in his statement that the Solvency II Directive, already adopted, creates a modern and risk-based prudential regime for insurance and reinsurance undertakings.
“National regulatory regimes for insurance, which vary greatly, are no longer able to guarantee an efficient internal market and prevent possible future crises,” added Barnier.
A regulatory proposal known as Omnibus II, which is currently in trilogue discussions makes significant modifications to Solvency II, in particular with regards to insurance products with long-term guarantees.
But Barnier explained that despite the latest trilogues on Omnibus II progressing well, the directive would not be in the official journal before 1 January 2014—the date when Solvency II is currently scheduled to start.
Barnier stressed that he has always wanted a “rapid implementation” of Solvency II, the currently planned date is no longer tenable.
“We have therefore proposed this postponement in order to avoid any legal uncertainty, especially for undertakings and supervisory authorities; we have done this only after obtaining assurance from the council and the parliament that they would not further change this new application date of Solvency II.”
Commenting on the recent news Paul Clarke, partner and global insurance regulatory leader at PwC, said: “It was widely known that a ‘Quick Fix 2’ was required to move the date from 2014, and there was concern in the market that a safe date that avoids the need for a ‘Quick Fix 3’ would have been in the distant future.”
“The fact that Barnier has chosen January 2016 as the start date in this new directive is encouraging and reflects confidence among the policy makers that a solution to the outstanding long term guarantee issue will be found this year ahead of parliamentary elections in 2014.”
