The European Commission has welcomed the European Parliament’s approval of the
proposed Directive on the taking-up and pursuit of the business of Insurance and
Reinsurance, also known as the Solvency II Directive. Solvency II is a ground-breaking
revision of EU insurance and reinsurance law designed to improve consumer protection,
modernise supervision, deepen market integration and increase the competitiveness
of European insurers. Under the new system, insurers and reinsurers would be required
to take account of all types of risk to which they are exposed and to manage those
risks more effectively and with increased transparency. In addition, insurance
groups would have a dedicated 'group supervisor' that would enable better monitoring
of the group as a whole. Intensive negotiations between the Parliament, the Council
and the Commission over the recent months have prepared the ground for swift adoption
by the EU’s Council of Ministers, to which the text as approved by the Parliament
will now return.
Commission President José Manual Barroso said: "By approving the Commission's proposal, the European Parliament has contributed
to lasting economic recovery. An integrated and competitive insurance sector,
supervised consistently across borders, is essential for every consumer and every
business in Europe. Solvency II will help protect policy holders from bad practice.
It will help shield our economies against a repeat of the disastrous excessive
risk taking by financial institutions, including certain insurance operators,
that has contributed to the global crisis. It will be good for insurers and reinsurers
themselves, by giving them new opportunities and helping restore confidence."
Internal Market and Services Commissioner Charlie McCreevy said: "I am very grateful
to the European Parliament for its contribution to bringing about a new, modern
risk-based solvency regime that will deepen integration of the EU insurance market,
enhance policyholder protection and increase the competitiveness of EU insurers.
We need Solvency II more than ever as a first response to the present financial
crisis. We need regulation that requires companies to properly manage their risks;
that increases transparency; and that ensures that supervisory authorities cooperate
and coordinate their activities more effectively.. However I considered the group
support regime to have been one of the most innovative aspects of the proposal
and a key element in the modernisation of the supervisory arrangements for cross-border
insurance and reinsurance companies. I personally regret that it is not now part
of the package. I hope however that this will be rectified in due course ”
The proposed Solvency II Directive (see IP/07/1060) is a framework Directive, which confines itself to setting out the principles
to which the new system would be subject. On a large number of issues, more detailed
implementing measures will be set down by the Commission, following consultations
with market participants and Member States, under the scrutiny of the European
Parliament. The Committee of European Insurance and Occupational Pensions Supervisors
(CEIOPS) will continue to play an important role in the further implementation
of Solvency II.
On group supervision, the text as approved by Parliament contains a number of
significant improvements as compared to the current system for insurance groups
supervision, even though it does not go as far as introducing the group support
regime as initially proposed by the Commission. The introduction of a review clause
specifically mentioning this regime will however enable the Commission to come
back to this issue when progress in a number of other areas, connected to the
recommendations of the de Larosiere report, will have been made and will have
brought about a more favourable environment for further reforms on cross-border
co-operation between home and host supervisors.
Solvency II is part of the Commission's Better Regulation strategy and its firm
commitment to simplify the regulatory environment and cut red tape. It will mean
replacing 14 existing directives with a single directive. The Commission aims
to have the new system in operation in 2012.
More information is available at:
ec.europa.eu/internal_market/insurance/solvency/index_en.htm
22 April 2009