Insurers will struggle to participate in the exercise to assess the impact of Solvency II on products with long-term guarantees if the full technical specifications for the exercise are not published imminently, experts warn.
The long-term guarantee assessment (LTGA) is set to begin on January 28, but the European Insurance and Occupational Pensions Authority (EIOPA), which is running the assessment, has come under fire both for scheduling the exercise during firms' year-end reporting period and for failing to publish the full details of the technical specifications for the exercise.
Details of the parameters of the assessment have yet to be published and there are concerns they may be released only days before the assessment is due to begin. EIOPA has yet to confirm when the specifications will be released, which are expected to contain information on how items including the matching adjustment, counter-cyclical premium and risk-free rate will be calculated.
Actuaries say the absence of any detail on when the specifications will be published could jeopardise insurers' ability to take part in the exercise, with smaller firms likely to be particularly challenged.
EIOPA says the delay in releasing the technical specification is a consequence of needing to adapt the specifications to the terms of reference for the assessment set out by the European Commission. These terms of reference have taken time to finalise because of political negotiations between the European Parliament and the Council of the European Union.
The launch of the assessment at the end of January has also raised fears that many firms will be unable to devote the necessary time and resources to participate because of the overlap with annual reporting.
Olav Jones, Brussels-based deputy director-general at trade organisation Insurance Europe, highlighted this concern in a letter to EIOPA chairman Gabriel Bernardino in December. The Association of British Insurers (ABI) says insurers should be given some flexibility in deadline for completing the exercise.
An EIOPA spokeswoman says the timetable for the assessment is intended to conform to the overall Omnibus II timetable. The assessment is being done to break the political deadlock between the council and the parliament in the negotiations to finalise the crucial Omnibus II Directive.
Yet there are fears that the exercise will not be completed in time for the parliament's plenary vote to finalise Omnibus II, scheduled to take place on June 10, regardless of when the LTGA begins. EIOPA will publish its report on the LTGA in June 2013.
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