EUROPE – New European insurance rules might be delayed
Europe’s insurers are likely to get a reprieve of up to two years to fully implement a planned overhaul of rules governing the capital buffers, which need to stay in business during times of stress, according to the sector’s top regulator in the region.
The currently envisaged January 1, 2014 starting date for fully implementing the detailed requirements on capital, risk and reporting in the European Union— dubbed Solvency II—is completely out of reach, said Gabriel Bernardino, chairman of European Insurance and Occupational Pensions Authority (EIOPA).
“Under the best scenario, Solvency II could start to be implemented either in 2015 or 2016. It depends on the length of the legal and political process,” Mr. Bernardino said in an interview. “At the end of the day, we’ll probably go to 2016, but it is still to be seen.”
Some delay was expected, but Mr. Bernardino publicly discussed the timing in concrete terms. EIOPA advises the European Commission on technical issues regarding Solvency II, but the political decision on when to start the new regime will be made by the European Parliament, the commission and the European Council.
As a result of the financial crisis, banks and insurers alike face tougher regulation, although insurers have fared substantially better through the crisis than the banks. Solvency II is the insurance industry’s European equivalent of the widely discussed Basel III, which is the global requirements for the banks.
The original deadline had been the cause of concern to insurers, who argued that information technology, risk management and reporting systems would need to be adapted to the new requirements.
Prudential PLC, the UK’s biggest insurer by market capitalisation, has warned that it may move its headquarters from London to Asia due to the uncertainty over the solvency rules.
GABRIEL BERNARDINO, CHAIRMAN OF EUROPEAN INSURANCE
AND OCCUPATIONAL PENSIONS AUTHORITY (EIOPA)
