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17 April 2009

EP and Council agree on Solvency II

The agreement set minimum levels for the MCR for different types of company and indicates that the MCR should be between 25 and 45 per cent of the company’s SCR.

Parliament and Council agreed on a common text on Solvency II to have the new legislation approved before the end of current legislative term.


The legislation introduces a new relationship between the SCR and the MCR. As well as setting absolute minimum levels for the MCR for different types of company, the text agreed indicates that the MCR should be between 25 and 45 per cent of the company’s SCR, with the exact amount being a calculation based on variables which indicate the company’s ability to remain operational.


The new legislation also sets up supervisory colleges made up of the various national supervisors responsible for a group and its subsidiaries to facilitate co-operation, exchange of information and consultation between the supervisors.


It also sets up a new system for supervising groups of insurance companies, by making one of the authorities take on the role of group supervisor with a leading role in monitoring cross-border companies and involving all supervisors in the decision making process concerning group issues.


Two years after entry into force, the Commission is requested to put forward a legislative proposal to improve, if necessary, the application of some aspects of the Directive, including the co-operation of supervisory authorities within the colleges.


Three years after entry into force, Commission will have to propose legislation to enhance group supervision and capital management within a group of insurance.


See EP Press release


© European Parliament

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