Solvency II gets compared

EU regulator group CEIOPS is to compare its proposed Solvency II regime with non-EU markets Switzerland and Bermuda and for reinsurance only, Japan. It said pursuing “an equivalence assessment for the United States” was too difficult.

Phil Smart, KPMG UK head of Solvency II, said: "This is an important step to providing clarity for groups as they implement Solvency II and consider the implications of having non-EEA insurers within the group. Equivalence is a critical issue for groups' structure, operations and the capital that they will be required to hold."

"The omission of the United States from the first wave is by no means a surprise. In assessing Switzerland and Bermuda within the first wave, CEIOPS has set its stall that those regulatory regimes that are significant for the European insurance market, and have well advanced Solvency II equivalence programmes, are where its efforts should be focused."

Planning for contingencies

"Equivalence is by no means guaranteed, and in the light of this, groups' implementation plans should still continue to factor in contingency plans in the event that equivalence is not forthcoming.

“In addition, for non-EEA headquartered groups, Solvency II plans should cover optimisation of the EEA group so that the extent of EEA regulatory group supervision can be managed through demonstration of minimal or little contagion from operations in non-equivalent jurisdictions."