After a two month wait, the next indicative date for the key European Parliament plenary meeting to consider, and hopefully approve, Omnibus 2 was released this morning. As KPMG had anticipated, this has been pushed back beyond the end of the year, and is now scheduled for 11 March 2014.
Peter Ott, European Head of Solvency II at KPMG, commented:
“Today’s announcement indicates that the trilogue process to agree the proposed amendments to Solvency II is taking longer than had been hoped. It needs to be recognised that there will be no single universally accepted solution to the long-term guarantee issue and political compromise must be reached quickly if Solvency II is ever to be finalised.”
Previous speculation around the Solvency II implementation date was predicated on Omnibus 2 being finalised this year. Now it has been formally recognised that this will be missed, the risk of a significant delay increases greatly. This will mean that the Guidelines on Preparing for Solvency II issued by the European Insurance and Occupational Pensions Authority (EIOPA) in draft in March could apply for an elongated period.
Janine Hawes, insurance director at KPMG in the UK, added:
“EIOPA's Guidelines will now effectively become a soft launch of Solvency II, meaning insurers need certainty on how these will apply. Industry has pushed back hard on the proposals around disclosure in particular, reflecting the challenges of providing numerical information before the basis for determining insurance provisions is finalised. Given these are intended to apply from 1 January 2014, it is important that these are finalised quickly and the extent of application in individual Member States confirmed.
“Politicians now need to move forward quickly with a second ‘quick fix’ directive to delay the switch-off of existing directives, which will otherwise happen on 1 January 2014. This would also have the benefit of providing industry with some much needed clarity around the implementation date for Solvency II.”
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