22 April 2009

Parliament adopted Solvency II Directive

Parliament and the Council have already reached an agreement on a common text. The legislative procedure ended with Parliamentary vote and a consequent formal go-ahead by the Council.

Parliament adopted the directive on Solvency II with 593 votes in favour, 80 against with 3 abstentions. As Parliament and the Council have already reached an agreement on a common text the legislative procedure ended with Parliamentary vote and a consequent formal go-ahead by the Council.

 

The new legislation shifts the focus of supervisory authorities from merely checking compliance with a "tick-the-box" approach based on a set of rules to more pro-actively supervising the risk management of individual companies based on a set of principles.

 

Colleges of supervisors will be established to improve supervision and risk management, to facilitate co-operation, exchange of information and consultation between the supervisors. EU companies would no longer need to deal with several national regulators, but just with one group.

 

The SCR will be calculated according to a risk-based approach: when capital falls below this level, supervisory intervention will be needed. The MCR is lower – the point at which the company’s license would need to be withdrawn.

 

The new legislation 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.

 

Member States will have to transpose the new directive by at the latest 31 October 2012.

 

Two years after entry into force, the Commission is requested to put forward a legislative proposal to improve, if necessary, the application 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. This would also include the provision, proposed by Parliament representatives, on group support.

 

EP Press release

Commission press release

 

© European Parliament