Omnibus 2 is a significant milestone for Solvency II and delays to its finalisation are having an unwanted impact on the Solvency II timeline, increasing fears that neither insurers nor regulators may be fully prepared for implementation on 1 January 2013.
Janine Hawes, insurance director at KPMG, commented: “The Solvency II timeline is becoming increasingly uncertain. Under the original draft of Omnibus 2, EIOPA was required to provide the Commission with their draft implementing technical standards by 31 December 2011. An EU Parliament paper in March suggested this be delayed until August next year. However the latest Council draft of Omnibus 2 suggests this could get pushed back even further, with submission dates from 30 September 2012 to 31 December 2016.”
It remains very unclear what, if anything, the Commission and EIOPA will publish before Omnibus 2 is finalised. Until the Commission publishes its draft level 2 text, EIOPA cannot start its public consultation on the draft implementing technical standards.
Janine Hawes continued: “This may explain the staggered dates proposed in the latest Omnibus 2 draft. However, once the advice is submitted, the Commission still needs to consider it before making the rules. Even the earliest date of next September could mean that the rules are not made until December 2012, just days before the insurance industry needs to be compliant with the requirements. This is not what was expected at the start of the Solvency II journey, when the insurance industry was led to believe that it would have a year to comply after all the requirements were known.
“Whilst it is true that insurers know the general direction of the rules, in terms of the final detail much of the industry is being kept in the dark. These delays lengthen the period when it is only the ‘key stakeholders’ (a select group including the main European actuarial group, the Chief Risk Officers and Chief Finance Officers Forums, and two other industry groups) who are aware of the latest developments and the rest of the industry is left with unanswered questions.
“A mechanism must be found to enable a wider and more timely distribution of remaining requirements so insurers have enough time to comply. This is important for both the industry and regulators. Insurers need clarity and regulators need time to make the legislative changes required and determine their supervisory approach. If implementing technical standards are still being developed in 2016, then insurers also need to know that regulators will not apply hindsight in the future to penalise firms for non-compliance against rules not even drafted when Solvency II comes into force.”
- Ends-
Notes to editor
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[1] European Insurance and Occupational Pensions Authority
