NEW YORK (BestWeek) - When it came to support for Solvency II, opinions largely broke down by geographic lines at the recent 17th annual Property/Casualty Insurance Joint Industry Forum, with some US and Bermuda insurance chiefs questioning its need while most European executives expressed support.Mike McGavick, CEO of XL Group, challenged its need.”What problem are you trying to solve? Insurers did well during the crisis and were a bulwark against its contagion,” McGavick said. “Solvency II reminds me of an overbuilt aeroplane rumbling down the runway, and as it fails to take off, they just keep laying more runway. They need to look at the design of the plane.”Richard Ward, CEO of Lloyd’s, said the industry has worked so hard on Solvency II because the principle behind it is to be applauded. “If we can somehow harmonise these 27 countries and the approach they take to capital and regulation, it would be good for the industry.”Solvency II is intended to establish a uniform standard of capital adequacy for insurers and reinsurers in the European Union. It originally had been set to take effect in October 2012, but delays have pushed back the expected start date to January 1, 2016, at the earliest, two years later than the most recent target.Most large European companies already think along the lines of Solvency II, which asks companies to view economic risk on both the asset and liability sides of their balance sheets, said Nikolaus von Bomhard, CEO of Munich Re, noting of the rule, “We like it.”Smaller life insurers may have more difficulty meeting increased capital requirements under Solvency II, especially on business they wrote before the new requirements were in place, he said.“They need to win time. The question on the table is do we breach the principles before we even implement them by bailing out the back books of those life insurers? Do we carve it out and make sure the new business is written properly?” von Bomhard said. “If you meddle too much with the principles that support Solvency II, then it destroys the model and I would rather say let’s not do it at all.”Mr McGavick said Solvency II’s premise that a local regulator would defer to a group regulator in another jurisdiction just isn’t practical.“If part of an insurance company that is in the UK fails due to some event, and the group regulator was out of the Netherlands, do you think the citizens of the UK will blame the Netherlands regulator or the local regulator?” he said. “Regulation is local for a reason.”One of the biggest laughs of the day came when Edward Rust Jr, chairman and CEO of State Farm, leaned over to McGavick, who was sitting next to him on a panel, and said: “I’m glad I’m not in Europe.”“I know how much of the audience is thinking the same thing,” McGavick said. “The reality is as these regulations are hardened in Europe, they will become the source of debate across the pond, and anyone who isn’t engaged in the fight over there, whether it is on [systemically important financial institutions] or Solvency II, is missing an opportunity to shape an outcome for themselves.”Texas Insurance Commissioner Eleanor Kitzman said US property/casualty insurers should not be subject to Solvency II regulations.“First of all, Solvency II has not been implemented. It’s not in place, and there’s still a lot of uncertainty as to when that is going to happen, if ever,” Kitzman said.No member of the National Association of Insurance Commissioners would support “making the kind of massive changes we would need to make in a system that we feel has performed very well,” Kitzman said. “It has been tested, it is continually tested and updated, and we are not advocating or supportive for the US to go to a Solvency II-type system.”The NAIC will continue to work with the European Union to better understand the regulatory differences and work “to craft a global approach that accommodates both of those systems,” she said.