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21 March 2013

EIOPA/Bernardino: "We are confident about the preparation level of insurance undertakings"


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The EIOPA chairman was interviewed by 'Svijet osiguranja' (World of Insurance) regarding Solvency II and what Croatia's insurance market can expect when Croatia joins the EU in July.


In the best scenario, the beginning of Solvency II implementation should be either in 2015 or 2016, as Mr Bernardino has recently said. He added that the date depends on the length of the legal and political process.

Previously it was announced that full implementation of Solvency II will happen at the beginning of 2014? What is the reason of the delay of Solvency II?

Last year the trilogue parties agreed that a final decision on the Omnibus II Directive can be taken only after EIOPA conducts the Long-Term Guarantee Assessment (LTGA). EIOPA supports this approach because before moving forward with Solvency II we indeed need to agree on a sound and prudent regime for the valuation of long-term guarantees. On 28 January 2013 we launched this study and hope to present its findings and our conclusions in June 2013. Afterwards we expect that the Omnibus II Directive will be finalised.

Some insurance companies complain that the Solvency II scheme favours bigger insurers who have the resources to easily adjust to the new regime. They complain that the costs of preparation are too big already. How do you comment on that?

No, Solvency II is a neutral framework. Already the level 1 text states that the Directive should not be too burdensome for small and medium-sized insurance companies. And one of the means to achieve this objective is the proper application of the proportionality principle. In our work related to the drafting of Technical Standards, we always take into account proportionality aspects that are related to the size, complexity or risk profile of insurance companies. The costs of preparation will be higher for the companies that want to use internal models for the calculations of their capital requirement. That will not be the case for the vast majority of companies in the EU.

Do you think that European insurers are prepared for the transition to Solvency II? Where do you expect the biggest problems to occur?

We are confident about the preparation level of insurance undertakings. At the same time we want to use the delay in Solvency II implementation for tackling possible problems in a consistent and convergent way and here I would like to mention EIOPA Opinion on interim measures related to Solvency II, which we issued in December last year. In this document we indicated that we see a great necessity in such interim measures because there is a risk that due to the delay of a final agreement on Solvency II, a number of European supervisors may decide to develop national solutions in order to ensure sound risk sensitive supervision. So instead of reaching consistent and convergent supervision in the EU, different national solutions may emerge to the detriment of a good, functioning internal market.

Croatia is about to join the EU this July – what big changes can we expect in the insurance world?

As all the other EU members, Croatia will have to comply with the EU legislation and, thus, for example with EIOPA Guidelines related to the interim measures for the Solvency II implementation or with the Guidelines on complaints-handling by insurance undertakings that we issued in 2012.

Are you familiar with the work of insurers in Croatia? How do you cooperate with our national supervisory authority Hanfa?

Yes, the information exchange among competent supervisors and EIOPA is one of the purposes for which the European System of Financial Supervision (ESFS) was created. As regards the cooperation, EIOPA started to prepare the ground for welcoming the Croatian Financial Services Supervisory Agency (HANFA) to our Board of Supervisors already in 2011. In 2012 HANFA became an observer of the BoS and started the preparatory work in order to comply with all the necessary requirements. The members of the HANFA Board and its staff members already actively participate in EIOPA activities such as the meetings of EIOPA Board of Supervisors, various committees and working groups and EIOPA trainings and seminars.

Many insurers operate on the European and global level so they are sometimes confronted with different supervisory regimes or practices; how can that be resolved?

The first step is to build up a harmonised prudential framework in the EU. That is the purpose of the Solvency II. Secondly we need to assure that day-to-day supervision of financial institutions is done within a consistent framework. EIOPA will develop a Supervisory Handbook that would work as a guidebook for supervision in Solvency II, setting out good practices in all the relevant areas of supervision. This handbook will foster the implementation of a more consistent framework for the conduct of supervision. Furthermore, there is a strong role for the colleges of supervisors. In the end of 2012, 91 insurance groups with cross-border activity were identified in the European Economic Area (EEA).

Full interview



© EIOPA


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