The final deadline for rolling out Solvency II should be delayed till January 1, 2014, said the Council of the European Union.
The European council had previously mandated the roll-out of Solvency II rules by January 1, 2013. Solvency II rules have been framed to strengthen the insurance industry’s capital requirements and risk management practices.
The new capital and risk management proposal, contained in the council’s Presidency Compromise on the Omnibus II directive, mandates Solvency II’s legal requirements be transposed into national law by January 1, 2013.
In a statement, consultant PricewaterhouseCoopers said the new proposal from the council suggests that although the elements of the directive regarding supervisory approvals will apply from July 1, 2013, approvals granted will not be effective until January 1, 2014.
“The Council of the European Union’s recommendation that the full requirements of Solvency II should not be implemented until January 1, 2014 is an interesting step forward, but it is not the full story”, said Paul Clarke, PwC global head of Solvency II.
“The European Parliament still needs to put forward its recommendation ahead of negotiations between the two groups before the market can fully understand where the issues around the Level 1 text and implementation date will end.
“It is unlikely the issue will be fully resolved until later this year, so it is vital insurers press ahead with their current plans and timetable. Any distraction now could prove potentially costly in the long run”, he added.
Victor Sants, the FSA chief executive had hinted a couple of days back that the Solvency II deadline could be relaxed.
“We expect firms to be ready. Until the Commission changes the deadline we continue to expect firms to be ready for the deadline even if it is obviously recognised that the Commission is giving consideration to whether that deadline is achievable”, Sants said while speaking at the biennial conference of the Association of British Insurers in London on Wednesday.