Cross-border solvency rules face small nation revolt
EU members yesterday dropped the cross-border insurer solvency plans amid fear that smaller countries would be sidelined by regulators in the UK, France and Germany, Reuters has reported.
"Only Britain, Ireland, Finland, Denmark and the Netherlands were against," one EU diplomat who was present at the meeting told the news agency.
Under the plan, cross-border insurers would be set a single solvency capital requirement, instead of several smaller sums in each country, with the sum set by the regulator in the firm’s home nation. The new sum would be lower than the total of all the smaller solvency amounts set by individual national regulators.
But 12 of the EU's 27 states were opposed.
EU president France put forward a compromise that ditched the cross-border solvency rules so that the broader reforms could continue.
Wednesday's decision was taken by ambassadors of the EU states and is expected to be formally endorsed by finance ministers next month.
That could lead to a row with the European Parliament, which has joint say on the reform and has already voted in favour of introducing cross-border solvency with safeguards for smaller countries.
Reuters quotes Peter Skinner, the British MEP steering the reform through parliament, as saying a delay of many months may now be inevitable.
"This is not a good result for a European directive that is meant to harmonise rules, regulations and supervision across the EU internal market," Skinner said.
"And it's not a good result while we are still facing the biggest financial crisis the planet has ever seen. It's something industry, parliament and the Commission does not want so who is wrong?"
