While some of the elements included within the ECON committee’s compromise text of Omnibus II are welcome – the recognition of the matching premium (now the matching adjustment) and the counter-cyclical premium, for instance – the document is clearly the outcome of the hasty, last-minute negotiation process that preceded it.
Some have pointed to its lack of coherency and the fact that some of the proposals (such as the matching adjustment) are potentially unworkable. In the case of the matching premium, which the UK and Spanish insurance industries have been lobbying hard for in order to address issues surrounding products with long-term guarantees, there remain concerns about the strict requirements of its application.
The committee’s text also proposes allowing Member States to opt out of using the matching adjustment, and would limit the mechanism’s application only to an insurer’s country of authorisation. Both of these amendments seem curiously contrary to Solvency II’s aim of introducing a harmonised regime, and would further limit the use of the adjustment tool.
Of course, the fact that the ECON committee has agreed on the inclusion of a matching adjustment at all is important, given that there were fears it may not have been included in the final text owing to pressure from other Member States. That it has means there now appears to be agreement between all three parties to the trialogue negotiations on the need for a mechanism to deal with the problems of long-term guarantees. This is clearly a good thing.
Yet, there are clearly serious issues of concern and the parliament seems intent on grappling with them at this stage in the legislative process, apparently to maintain as much control over the matching adjustment’s development as possible.
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