The European pensions regulator has called on the European Commission to urgently set out out a clear and credible timetable for implementing the new set of rules governing Europes insurance industry, Solvency II.
Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority, wrote to Michel Barnier, European commissioner for internal market and services, yesterday to highlight 'major worries' among national regulatory bodies over the status of the new rules.
Political negotiations over Omnibus II, the legislation that has to be passed before the Solvency II rules can be introduced are 'stagnant', leaving policyholders at risk from the 'outdated and fragmented' system currently used to supervise Europe's insurers, Bernardino warned.
Solvency II, which places new capital requirements on insurance companies, is currently scheduled to be applied from January 2014, but delays to key votes on Omnibus II have led to concerns over whether this date will be met.
Last month, Barnier suggested political agreement on the changes might not be reached until after the completion of a new impact study relating to the risks attached to long-term guarantees offered by insurers and how Solvency II might impact on the long-term investments associated with these.
In his letter, Bernardino said that while it was necessary to build a 'sound and prudent' regime for these guarantees, EIOPA was 'seriously concerned about the lack of a clear and credible timetable for the implementation of the new regime'.
The current European Union supervisory system for the insurance sector fails to take account of a number of key risks to insurers, something he said could put insurance policyholders at risk.
'If we have to continue supervision on this basis, there is a huge danger that supervisors will not be able to identify and analyse risks correctly and will not be able to take the necessary supervisory actions in time, which may have serious consequences for policyholder protection,' Bernardino wrote.
The lack of a single new Europe-wide system could also force national regulators to develop their own 'conflicting' approaches to insurance industry supervision, and undermine EU credibility in discussions attempting to create a single global framework for insurance risk supervision.
Bernardino said: 'We urge the political parties involved to come up with a sound and reliable timetable for the implementation of Solvency II as soon as possible.'
This timetable should be based on a realistic assessment of how long it will take to introduce and meet the new requirements by setting 'operationally achievable timings'.
'Once a credible overall timetable is agreed, a reflection should be made on the possibility of earlier implementation of some Solvency II elements, in order to address the above mentioned concerns,' he added.