KPMG has warned that Solvency II has become too ambitious given its current deadline, and has called for greater guidance from EIOPA to get the troubled capital adequacy regime back on track.
In order to address insurance industry frustrations over the uncertainty and moving timetables of Solvency II, Roger Jackson, insurance partner at KPMG, said: “There is a lot of work that needs to be done to turn the current situation of confusion and frustration around. First of all, the industry would welcome greater impetus from EIOPA to steer stronger engagement and dialogue between European regulators."
“In addition, there are also some more specific, technical suggestions which may help re-energise this regulatory framework. In particular, on a pan-European basis Pillar 2 could be de-coupled from Pillar 1 and adopted early to continue the drive towards a more harmonised approach across Europe. Pillar 1 should then be left to run its course", he said. He argued that an early adoption of Pillar 2 would enable businesses to capitalise on the work they have done to date and ingrain more effective governance and risk management procedures.
Phil Smart, UK head of Solvency II at KPMG, warned that the Solvency II regime "seems to have lost its course of late, with some analysts now predicting it may never actually get off the ground". “It is time for key industry players and regulators to admit that the framework may have been too ambitious and work together to turn the ship around. Some solid foundations have been laid and we must ensure these efforts do not go to waste”, he said.
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