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EU confident Solvency II is on track for 2013 launch

Regulators are downplaying concerns that the implementation of Solvency II regulation could be delayed for a year, saying they are confident the new capital regime is still on schedule with a ‘soft launch’ planned for January 2013. “The European Parliament has adopted Solvency II way back in 2009. People have asked whether it will ever come to pass. We’re working on that, and we still intend for it to come to pass in January 2013 for a ‘soft launch,” said Peter Skinner, who is a member of the European Parliament’s Committee on Economic and Monetary Affairs and reported by Dow Jones. “We can have this law in place for soft launch in January 1, 2013. I’m confident,” he added. According to Dow Jones, a soft launch means that the responsibilities of country supervisors relating to Solvency II will start on the first of the year 2013, with implementation by insurance companies coming after that. “After working on a text called Omnibus II, which is an implementing approach and instrument needed by regulators to do the job they need to do, we should be able to move rapidly into the implementing measures,” Mr Skinner said last week. Mr Skinner also stated his committee will have a vote on the current Solvency II document on March 20 and 21. This will then be discussed in between the European Council, Parliament and Commission between April and July. Insurers have been concerned about a potential delay of Solvency II, after having already spent huge amounts in preparing for compliance with the upcoming rules. They fear a delay if time runs out in debating certain provisions of Solvency II. Experts have previously said that compliance would likely force European insurers to spend more than the EUR3 billion estimate of the European Commission. The Bermuda Monetary Authority has said it will continue efforts to earn “third-country equivalency” with the Solvency II directive for regulating major commercial re/insurance market, with the aim of not having to apply the more stringent supervision standards to the Island’s captives. A major concern by Bermuda’s captive insurance sector is whether equivalence would mean captives being subjected to the same increased capital requirements as commercial insurers. According to the BMA, this segmented approach was deemed permissible by the head of the European Commission unit for insurance and pensions in December. Meanwhile, Britain’s insurance industry lobby said this week that the European Union must do more to make sure proposed new capital rules for European insurers do not hinder them from competing in global markets. “We want to see third-country equivalence move up the agenda in the months to come,” Otto Thorsen, director general of the Association of British Insurers, told a conference in London. “European companies must not be put at a competitive disadvantage with local players in international markets.” Britain’s biggest insurer, Prudential, warned recently that it might move its headquarters outside the EU if the Solvency II capital regime forced it to hold extra reserves, making it less competitive against non-European rivals. Mr Skinner said his group is wasting no time moving the regulation forward. “We need haste to make this agreement and convert it into different languages and make transcripts ahead of a full plenary of the European Parliament in October,” Mr Skinner said. “We can do this. We can take the agreement that we’ll have with the Council and wrap it up, take in the amendments in Parliament and then it becomes official law.”

Coming next year? The European Union's Solvency II regulations, with which Bermuda is seeking equivalency