Practical preparation for Solvency II on “knife edge”The final Solvency II legislative package will only be finalised in Autumn 2012. In the European Committee First Quarter Update, the ABI said the delay is a result to a number of changes to Omnibus II published in January this year. The ABI said, “This does mean that, while companies remain supportive of 2013 as a start date, their ability to make practical preparations is on a knife edge.” The Update also addresses a number of unresolved issues that emerged from the QIS 5 results, published last month, which could lead to higher capital requirements:
- The recognition of an illiquidity premium for new business
- Transitional arrangements for existing business (annuities, hybrid capital)
- The definition of contract boundaries
- SCR calibrations, in particular non-life catastrophe risk and counterparty risk for life and non-life
- Equivalence with third country regimes.