Solvency II on track for 2016, hurdles cleared

Solvency II is looking well set to hit its 1 January, 2016 implementation deadline after passing a major legislative milestone ahead of time.

Solvency II was given a boost recently as the Solvency II Delegated Acts-an important part of the directive’s legislative process-were published in the Official Journal.

The publication of the Delegated Acts, which set out more detailed legislation on Solvency II, was achieved ahead of schedule, according to Olav Jones, Deputy Director General of Insurance Europe.

The European Parliament and European Commission took three months, rather than the potential six months often used, to accept the Delegated Acts.

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“The publication of the Delegated Acts in January rather than April has been welcomed and means that Solvency II is still on track for its 2016 deadline for implementation and the timetable is now a little less fraught. Implementation, including technical standards and guidelines from EIOPA can now continue to progress,” said Jones.

The prompt publication of the Delegated Acts is also good news in the push for ‘equivalence’ decisions, which will affect both how European insurance groups operate internationally and how non-European groups operate in Europe. According to Jones, the publication of the Delegated Act means that concrete progress can now be made on this issue.

Solvency II implementation now looks almost certain for January 2016, according to Mohammad Khan, Partner at PricewaterhouseCoopers. Preparations for implementation have been increasing as certainty around Solvency II requirements have improved, he said.

However, Solvency II implementation remains a challenge. There will be some 3,200 pages of legislation and guidance in total describing the entire Solvency II system, estimates Mr Jones. There is still a lot of work for regulators, supervisors and insurers to do this year in order to be ready for implementation in 2016, he said.

“Solvency II is a fundamental change in the way the insurance industry in Europe is regulated and supervised and can be considered a revolution in insurance regulation,” said Jones. “With legislation of this size, it is not a great surprise that during development the industry and other stakeholders identified a large number of areas that needed improvements and changes. Some of these were improved, but not all and some important issues remain,” he said.