Regulators to draw up Solvency II regime

By Nikki Tait in Brussels

Published: November 10 2009 02:16

European regulators “do not intend” to deviate from the original purpose of the new capital rules for insurers, which won legislative approval earlier this year, as they draw up more a detailed implementing regime, a top official pledged on Monday.

Gabriel Bernardino, the new Portugese head of the pan-European committee of insurance regulators, told European lawmakers: “It’s not our intention to depart from the text ... which we have all agreed”.

But he added the qualification that on some issues, there would have to be an element of interpretation in terms of the technical consquences.

The Committee of European Insurance and Occupational Pensions Supervisors is due to send papers outlining its advice to the European Commisison on how the new so-called Solvency II rules should be applied this week.

Its consultation papers earlier this summer drew heavy protests from the industry which claimed that Cieops’ approach to the new Solvency II regime was too conservative, and could require insurers to raise billions of euros in additional captial unnecessarily.

It was suggested that there was a “crude racheting up of the financial requirements” because regulators had been spooked by the financial crisis.
Appearing before an influential parliamentary committee in Brussels on Monday, however, Mr Bernardino said that the commission had already intervened in half a dozen areas, raising questions about consistency with the original legislative – prompting further reflection by Ceiops.

He added that the committee would express views in its papers this week, bujt said that on the fraught “liquidity premium” issue, it was open to further discussions. “There is going to be a taskforce to look at this,” he told MEPs.

In the UK, one of the biggest concerns has been over Cieops view that insurers could not apply a so-called liquidity premium when assessing the yield on their debt assets or the value of their liabilities.

Separately, Mr Bernardino also said he believed the European insurance sector was “sub-standard” in terms of the guarantee schemes which it offered consumers and other purchasers of its products. He said that this was something which should be urgently addressed at European level, particularly in terms of life insurance products.

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