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15 November 2012

CRE: EIOPA still open to Solvency II rule changes for captives


Delays to Solvency II should be viewed as an opportunity to engage with regulators and EIOPA about the implementation of the new rules, especially in relation to captives, according to the executive director of EIOPA, Carlos Montalvo.

Montalvo also said that the delay was a clear opportunity to have extra time to ensure that captives and insurers are ready for implementation when it comes. Clearly, captive owners and managers should take note of this invitation to discuss new ideas and take advantage while the door remains open.

Mr Montalvo said: “We do not want to destroy something that works and makes sense—regulators are not that naïve. We strongly believe that risk-based supervision, a risk-based framework, makes a lot of sense for captives.”

Why is 2016 being talked about? Montalvo said 2015 was clearly too soon and 2017 was too late, which leaves 2016. He said that, in his view, Solvency II would be good for the insurance industry and so the sooner it is implemented the better. But it is up to European politicians, not European regulators, he explained, to make the final decision.

But messages from the insurance industry suggest that it does not want to wait until 2016. Mr Montalvo’s advice was simply to work on the basis that the 2014 deadline still applied. He explained that the value of Solvency II was the better you know the risks the better they can be managed. Also, it will ensure enhanced supervision and a harmonised reporting framework and reliable disclosure, he said.

The Forum also heard from a long-standing insurance regulator and one that will be tasked with enforcing Solvency II. Victor Rod, President of Commissariat aux Assurances Luxembourg, said that, provided an agreement on implementation date for Solvency II can be agreed, it will be applied to captives in Europe. He said the new qualitative and quantitative requirements would be a challenge for captive owners, regulators and supervisors.

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