Solvency II first draft expected in October
BRUSSELS - The revised `roadmap' for Europe's risk-based Solvency II project for making insurers safer envisages having a first draft, containing major parts of the Solvency II framework directive, ready for discussion by October.
The latest roadmap confirms that the aim is for the European Commission, the executive arm of the European Union that's responsible for financial regulation in the 25-nation bloc, to adopt the draft law a year later in October, 2006. That's a year later than planned in the earlier roadmap issued in July last year.
There were several reasons for the delay. These included the need for more time to clarify general issues and to carry out extended impact assessments and simulations.
There's no mention in the roadmap of a date for implementing Solvency II, but senior EU officials have recently stood by hopes that the rules could come into effect by 2010 (see Global Risk Regulator, March 2005). However, some industry analysts are sceptical about the chances. By contrast, the Capital Requirements Directive, the law that will apply the Basel II capital rules to all EU banks and investment firms, starts taking effect in January, 2007.
The roadmap was among documents reviewed in early April by the Commission's insurance committee, which comprises government-level officials from the EU states. A few days later the committee at last officially became the European Insurance and Occupational Pensions Committee (EIOPC) under the so-called Lamfalussy structure for making more efficient the development of European financial regulation.
The framework directive will provide the general principles of the Solvency II regime, which will have to be approved by the EU Council of Ministers and the European Parliament. EIOPC and the Committee of European Insurance and Occupational Pensions Supervisors, or CEIOPS - the grouping of insurance supervisors and experts from the member states - will aid the Commission in adopting implementing measures.
The first draft of the directive will be discussed by the Commission's solvency working group in October and by EIOPC in December. An advanced draft should be ready by April, 2006 and will be accompanied by an impact assessment report that gauges its effect on the insurance industry for the Council and Parliament. The first assessment will look at major issues and the overall quantitative impact of the introduction of Solvency II - it won't take the form of a detailed study along the lines of the Basel II bank impact surveys.
