The European Commission is to propose postponing the transposition of Solvency II to 30 June 2013 and the application by companies to 1 January 2014. News of the delay was originally reported on Bloomberg and Financial Times Deutschland.
Chantal Hughes, Spokesperson for the European Commission, said, “The new proposal shall be seen as a safeguard to ensure legal certainty in face of the most likely scenario where Omnibus II is not published before 31 October 2012.”
The Solvency II Directive adopted in 2009 has to be transposed into national law by Member States by 31 October 2012. Crucially the Directive states that, in effect, Solvency I runs out on the same date.
“This proposal, addressing exclusively this matter [the transposition date], will have to be fast-tracked through the European Parliament and the Council. The Commission counts on the full cooperation of the co-legislators in this regard,” Ms Hughes added.
New common guidelines (Solvency II Wire 28 March 2012) have already been introduced to shorten the time scale between the vote in the Plenary and publication in the Official Journal once the trialogues conclude.
The Commission said that despite efforts by the co-legislators, it could not be excluded and it is indeed most likely that the final adoption of Omnibus II will come too late to allow publication of the text before 31 October 2012. This would create important legal uncertainty for Member States and companies since it would mean that the old Solvency regime would be repealed without all the necessary Solvency II components in place.
The so-called Omnibus II Directive, presented by the Commission in January 2011, adapted Solvency II to the new European supervisory structure (this includes replacing CEIOPS with EIOPA). Omnibus II also foresaw some important measures in order to ensure a smooth transition to the new regime. It postponed both the transposition by Member States and the application by companies to 31 December 2012.
The Council general approach and the ECON Committee report later postponed the transposition date to 31 March 2013 and the application date to 1 January 2014.
Appealing to participants in the trialogue negotiations, Ms Hughes said, “As the Commission has repeatedly emphasised, the quick adoption of the full Solvency II regime remains a major priority for the Commission. It is absolutely necessary to ensure that all EU insurers are adequately capitalised and supervised and subject to an efficient, modern insurance regulation. Against this background, the Commission counts on the strong commitment of the co-legislators to ensure that the ongoing trialogues on Omnibus II are concluded as rapidly as possible.”
Hugh Savill, Director of Prudential Regulation, Association of British Insurers said, “The Commission’s announcement today means that insurers will have even less time to prepare for the implementation of Solvency II. Our members are already well advanced in their preparations for Solvency II but the concern for insurers, particularly those who want to use an internal model, is that this leaves them very little room for manoeuvre.”