Delaying the introduction of new capital requirements for Europe's insurers in order to complete a new study in the impact of the changes would be 'regrettable but necessary', Insurance Europe said today.
It emerged yesterday that the European Commissioner for internal markets, Michel Barnier, had proposed that political agreement on the legislation underpinning the new Solvency II system, the Omnibus II Directive, might not be reached until the impact study had been finished.
The impact study, which relates to the risks attached to long-term guarantees offered by insurers and how the Solvency II might impact on the long-term investments associated with these, is not expected to be finalised until March 2013.
Insurance Europe, which represents insurance and reinsurance associations across Europe, welcomed the decision to finalise the impact assessment first before reaching agreement on Omnibus II.
'It is regrettable that this may lead to a delay in the Solvency II process, but it is vital that the results of the tests can be reflected in Omnibus II in order to ensure that the new regulatory regime is both appropriate and workable,' it said.
Insurance companies are currently required to meet the requirements of Solvency II from January 1 2014, although last month’s decision to postpone a key European Parliament on Omnibus II from October to November had already raised concerns that this date might slip.
'The decision to carry out the assessment shows that legislators have recognised that measures are needed to ensure that the Solvency II framework measures the real risks faced by insurance companies' long-term business and does not create artificial volatility.
'Without such measures the provision by insurers of long-term guarantees and their matching long term investment would be under threat. The challenge now is to ensure that those measures are correctly designed and work across the European markets.
Rob Stavrou, director of consultancy at IT consultants Northdoor, said while insurers should welcome the additional clarity the impact study might provide they would also be grateful for more certainty over the final timetable for Solvency II.
'Firms are looking for clear guidelines and directives from regulators so they can act and plan accordingly. Constant delays - and it is safe to say more can be expected - make complicated implementation and compliance procedures even harder to adhere to.'
