Omnibus II vote pushed back to March 2013
The January 2014 deadline for Solvency II will be impossible to meet after the European parliament pushed back its key Omnibus II vote to March 2013, according to KPMG.
KPMG’s insurance director Janine Hawes said the latest delay in the vote, which was scheduled for next month, effectively renders it impossible to meet the 1 January 2014 deadline.
Omnibus II is a package of key changes to the Solvency II directive.
Hawes said: “Few industry participants will be surprised with this news. It is safe to say that the industry, as a whole, had all but given up on 2014 as a viable implementation option in any case.
“No reason has been given for the delay in the plenary vote; however, it is likely to be to accommodate the forthcoming impact study to assess the effect of the various proposals on the long-term guarantee package.
“This will take place later this year and the timing of this vote suggests that the trilogue process will now largely be stalled until the results of this study are known. Unfortunately, despite calls for a clear statement on timeline, including most recently by Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority, no such announcement has been made.”
Hawes said the main challenge now was to quickly assess the results of the impact study and come up with an agreed solution in the trilogue process between the EU Commission, parliament, and the council. She warned that the European parliament’s plenary vote could be moved further back as a result.
“The dates for transposition and implementation of Solvency II will also need to be amended again, with a second short ‘quick fix’ directive required,” she said. “The question that remains is whether this will be a delay of one or two years.
“We therefore repeat our previous pleas for the indicative timeline to be published, so that the entire insurance industry has clarity on when the regime will come into force so the remainder of the process can be managed.”
PwC’s global Solvency II leader Paul Clarke said: “Expected by many within the industry, some will welcome the delay in order for a solution to be reached on the scope and application of the matching adjustor, however, the overriding sentiment will be frustration as the implementation is pushed back again.
“The delay represents a failure to reach an agreement on long term guarantee issues - despite the best efforts of policy makers over the previous 12 months. This will impact the FSA’s ability to approve an internal model for regulatory capital purposes and will consequently impact insurers’ IMAP programmes.
“This delay is potentially damaging to the Solvency II brand outside Europe – this is regrettable, as the founding principles of Solvency II are solid, but as is so typical with radical pieces of legislation, the devil is in the detail.
“Even though the industry must now wait for rule certainty and consensus, the bulk of the framework is established and therefore insurers should remain completely focused on embedding their Solvency II programmes into business as usual. ”
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