The proposed changes to Solvency II have finally been voted through.
The European Parliament’s seal of approval for the Omnibus II package of proposed changes to Solvency II is a mixed blessing for the industry.
The European Parliament’s Economic and Monetary Affairs Committee (ECON) voted on the proposals today and passed most of them. As well as giving the industry some key concessions, the vote removes uncertainty.
The ECON vote had been delayed twice, and was supposed to take place last December. The hold-ups did not help improve insurers’ confidence in the regime, and caused some to question whether it would ever see the light of day.
Now the vote is in the bag, and with few nasty surprises for the industry, it shows that progress is being made, and that insurers have not wasted precious time and money trying to implement a regime that was ultimately doomed to failure.
Also, while the ECON vote has brought forward the date when Solvency II has to be transposed into local law to January 2013 from March 2013 – bad news for regulators – the implementation date for companies remains January 2014. This is good because it is in line with expectations, and there has been no further slippage in the time-frame, which might have further undermined confidence in the regime.
It’s not all good news though. Omnibus II does nothing to address concerns about a lack of temporary equivalence with the USA. This is the issue over which life insurer Prudential has threatened to leave the UK, and which could hurt other companies with large US operations.
In addition, anyone secretly hoping Solvency II would fail so they could avoid the headache of implementation will be disappointed by this progress.
Biggs set to take Direct Line hot seat
Reports suggesting former Aviva finance director Mike Biggs has been picked to chair the company formerly known as RBS Insurance adds to the growing list of signs that the company will separate itself from RBS through a flotation rather than a trade sale.
He has a lot of experience running public companies, and Direct Line chief executive Paul Geddes, who has not, will no doubt welcome his experience. Biggs is currently chairman of listed life insurance consolidator Resolution.
However, given that some of the other candidates rumoured for the job – former RSA chief Andy Haste and former Aviva UK chief Patrick Snowball – some may be surprised by the choice, if indeed Biggs is it.
Biggs’ experience is largely on the life side of the business, and Direct Line is almost exclusively general insurance, where Both Haste and Snowball have extensive experience. Snowball currently runs Australian insurer Suncorp.
Also, reports suggest Biggs will remain chairman of Resolution until 2014, meaning he will be chairing Direct Line and Resolution simultaneously for a while. Given the amount of work a flotation requires, it is surprising that Direct Line would not opt for someone who could devote their full attention to it.