Insurers fear that Bernardino’s proposals could lead to a fragmentation of Solvency II, although some suggest that early adoption would benefit those firms already advanced in their preparations.
Frank Eijsink, global programme director of Solvency II at ING Insurance in Amsterdam, says a pre-emptive launch could cause difficulties for firms that operate across national borders. “ING is active in many European countries and therefore has a keen interest that a Europe-wide framework gets established. A soft implementation may be ‘country-by-country’ and is not good for having a level playing field”, he says.
Trade body Insurance Europe also fears that Bernardino’s statement could signal the green light for national supervisors to take regulation into their own hands. Director-general Michaela Koller says: “Our members consider it of paramount importance that national supervisors do not start to make piecemeal changes that take national regulation in different directions".
The European Commission also appears to hold the view that an early application of Solvency II would be problematic, as it may require making parts of the Directive legally enforceable before others, increasing the number of proposals needed to ensure the regime’s proper implementation and disrupting the legislative process.
However, some insurers welcome the possibility of a soft launch, as it would provide an opportunity to utilise the work they have done so far on their Pillar II requirements, such as the Own Risk and Solvency Assessment. In the UK, the Financial Services Authority (FSA) has already taken steps in this direction by floating an enhancement to its Individual Capital Assessment (ICA) regime, named ICA+. The augmented version would permit firms to utilise their Solvency II internal models to calculate their capital requirements, making use of the work UK firms have done in this area to date.
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