The Solvency II Delegated Acts, which contain the rules for the implementation of the incoming directive, entered into force on 18 January 2015.
The European Commission originally adopted the rules on 10 October 2014.
Olav Jones, deputy director general of Insurance Europe, said: “The adoption of the Delegated Acts is an important, and very welcome, step forward in the implementation of Solvency II in 2016.”
“Europe’s insurers play a vital role in providing protection and long-term savings products for Europe’s citizens and businesses. Solvency II can help ensure the European insurance industry remains strong and able to withstand extreme events, as it has over many years.”
The rules cover: the valuation of assets and liabilities, including the so-called “long-term guarantee measures”; how to set the level of capital for asset classes an insurer may invest in; the eligibility of insurers’ own fund items to cover capital requirements; how insurance companies should be managed and governed; equivalence assessments of third-country solvency regimes; the internal model framework; and rules related to insurance groups.
Jones also stressed that it is important that the review processes built into the regulation are used to make a number of refinements and improvements, particularly regarding “unnecessarily high capital charges for long-term investments which are crucial to European economic growth”.
Speaking at Moore Stephens’ Solvency II Seminar, Omar Ripon, partner in Moore Stephens’ Insurance Industry Group, advised firms to take a long term strategic approach to Solvency II beyond the regulatory “box-ticking mentality”.
He commented: “Solvency II is finally becoming a reality and there is no time to waste. All insurers, including the smaller firms and niche companies such as captives, have much to gain from understanding the benefits of Solvency II and thereby reducing their compliance costs.”
Ripon also said that “smart firms” would already be strategically planning well beyond the next 12 months.
At the same seminar, Ripon stated that Pillar III implementation would be the most strenuous for firms, and would require them to have a long-term strategic vision beyond regulatory compliance mentality.
Moore Stephens said that it expects firms to carry out detailed Pillar II gap analysis in Q1 2015, if not already done, and to have already prepared implementation plans.
Jones concluded: “We welcome the letter sent by Parliament which raises some of the same issues that we had indicated would need improvement and follow-up.”
