Feedback from the study will be crucial to the development of
measures to implement the new regime. The organisers say they want
at least 25% of the total number of European insurance and
reinsurance undertakings, and 60% of European insurance groups, to
participate.
Solvency rules protect policyholders' interests by requiring
that insurers and reinsurers hold sufficient assets to meet their
liabilities. Solvency II is the European Commission's project for
implementing a new, harmonised solvency regime across the
EU.
Current EU solvency rules require insurers to hold capital
against their insurance risks. Under the new system, insurers'
capital requirements will also have to take into account market
risks (such as a fall in the value of their investments),
operational risks (malpractice or system failure) and credit risks
(such as a default on a large debt).
This means that insurers will need to take a much more active
role in evaluating their own risk profiles, managing those risks
effectively and assessing their own capital needs.
The Committee of European Insurance and Occupational Pensions
Supervisors (CEIOPS), has been carrying out large-scale
quantitative impact studies on the proposals to assess their
practicability. The latest of these, Quantitative Impact Study 4
(QIS4), will run from April to July 2008. CEIOPs will report on the
results in November 2008.
Further advice
CEIOPS has also been asked to advise the European Commission by
May 2008 on the practical application of the group solvency regime
proposed under Solvency II.
Currently, insurance groups in the EU are treated as a
collection of separate entities, each supervised individually and
locally. Solvency II will streamline the system by introducing a
dedicated group supervisor in the group's "home" member state who
will be responsible for monitoring the group as a whole.
Also due in May is CEIOPS' advice on proportionality and how
Solvency II will affect small and medium-sized insurers. There has
been some concern that the new regime will place too great an
administrative burden on such firms.
Timetable
The Commission wants Solvency II to be in operation by the end
of 2012. It is hoping that its Framework Directive can be adopted
by the Council and the European Parliament by the end of 2008.
Implementing measures ("Level 2") are due to be published in the
first half of 2010, with a view to these being adopted by the
second half of 2010. Supervisory guidance ("Level 3") should be
completed at the same time.
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