The European insurance industry regulator needs to take a leading role in addressing the confusion and frustration' being caused by uncertainty over new rules governing Europes insurers, KPMG said today.
The rules, known as Solvency II, were expected to apply to the European insurance industry from January 2014, but delays with a key European Parliament vote needed before they can take effect have led to concerns their introduction may be pushed back - or simply abandoned.
Phil Smart, UK head of Solvency II at KPMG, said: 'The Solvency II regime seems to have lost its course of late, with some analysts now predicting it may never actually get off the ground.
'It is time for key industry players and regulators to admit that the framework may have been too ambitious and work together to turn the ship around. Some solid foundations have been laid and we must ensure these efforts do not go to waste.'
In particular, KPMG called for 'greater impetus' from the European Insurance and Occupational Pensions Authority to steer stronger engagement and dialogue between regulators in different European countries.
To 're-energise' the regulatory framework, the focus should be shifted across Europe on insurers preparing for Pillar 1 of the rules - relating to capital requirements - to Pillar 2, which sets out governance and risk management obligations.
Roger Jackson, insurance partner at KPMG, said: 'An early adoption of Pillar 2 would enable businesses to capitalise on the work they've done to date and ingrain more effective governance and risk management procedures.
'We are already witnessing regulators beginning to forge ahead with aspects of the Pillar 2 regime. However it is imperative there is a consistent approach across all countries to ensure a level playing field. This requires stronger oversight from EIOPA, including in relation to the college process, to drive a more harmonised approach to implementation and seek to force more effective collaboration between regulators.'
KPMG also highlighted the heavy investment many firms had made in preparing for Pillar 1, and in particular using an internal model to calculate their capital requirements. 'These businesses may now believe they have wasted time and money getting to this stage,' Jackson said. 'What we really need is to find a pragmatic outcome that can be achieved without further costs being incurred and work having to be unwound.'