Barnier is to participate in crunch Omnibus II negotiations, in an unusual move that raises expectations that a political agreement will finally be reached.
Over the past two months, European policy-makers have come close to a compromise on a controversial package of measures for insurance products with long-term guarantees [LTGs], which caused discussions to come to a deadlock last year. Barnier's presence at tomorrow's negotiations is significant as he is often absent from trilogue discussions that lack political significance.
In a written statement, on Monday, Barnier, the European Commissioner for Internal Market and Services, expressed confidence that a long-awaited deal was within reach. "We've made a lot of progress and are urging all sides to work together in a spirit of compromise to take this over the finish line", Barnier said.
Circulated documents indicate that a political compromise will result in profound changes being made to the calibration of the LTG measures proposed by the European Insurance and Occupational Pensions Authority (EIOPA) in June. The application ratio of the volatility adjuster is likely to be fixed at 65 per cent, up from the 20 per cent proposed by EIOPA, and the design of the measure will also be changed. Policy-makers also conceded to pressure from Germany to extent the length of Pillar I transitional measures. Insurers are likely to be given up to 16 years to move their back books of business to the new solvency regime, up from the seven years proposed in EIOPA's report.
Equivalence rules is another issue that has been left open to the last round of discussions. The Commission is to likely be given the flexibility to grant unilaterally equivalence status to third countries that refused to engage in a formal equivalence process, such as the US and Canada.
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