Solvency II

Solvency II is a fundamental review of the capital adequacy regime for the European insurance industry. It aims to establish a revised set of EU-wide capital requirements and risk management standards that will replace the current solvency requirements.

News:

May 2012

On 16 May, the European Commission proposed text for a short directive to change the current implementation date of 1 November 2012 in the Solvency II Directive to reflect discussions about bifurcation. The date for transposition by Member States is proposed to be 30 June 2013, with implementation from 1 January 2014. The text is subject to approval by the European Parliament and European Council under the procedure for emergency legislation. We expect the short directive to be adopted either before the summer recess or early Q3 2012. We will update our implementation assumptions when we have more certainty of the dates and will continue our work with the industry on current timelines.

Julian Adams, Director of Insurance at the FSA, delivered a keynote address at the Insurance Day summit on Tuesday 15 May titled ‘Update on Solvency II for the London Market’.  Topics include how we envisage working with firms in the run up to implementation and our ongoing commitment to offer feedback to internal model firms following our letter to them on 14 May, detailing some of the issues we have seen through our review and assessment work with internal model firms to date.

As part of our commitment to giving feedback, Julian Adams, Director of Insurance at the FSA has sent a letter to firms in our internal model approval process with themes from our review and assessment work. We hope this will help firms to make a satisfactory submission to us during their allocated slot. It does not supersede individual feedback we have given firms to date, and we hope it will also be useful to firms where we have not yet started review and assessment work.

April 2012

Julian Adams, Director of Insurance at the FSA, gave a speech on 'The new approach to insurance regulation and the implementation of Solvency II' on Thursday 19 April. Topics include the role of supervisory judgement and proportionality in Solvency II, our experience of working with firms to date and how our implementation of Solvency II will form the basis of the PRA’s approach to insurance supervision in future.

The vote of the European Parliament on the final version of the Omnibus II Directive, due to take place in July, has been rescheduled to 10 September. Trialogue discussions between the European Commission, Council and Parliament will continue as planned and we will update you on the outcome of the vote in September. We expect some speculation during trialogue, however, we caution against relying on this information as it will be incomplete, given the private nature of the trialogue discussions. The plenary vote will lead to a final version of Omnibus II, expected in Q3 2012, enabling consultation to start on the Level 2 and Level 3 text. In the meantime, our assumptions about implementation remain and firms should continue to make progress on this basis.

March 2012

The vote by the Economic and Monetary Affairs Committee of the European Parliament (ECON) on the Parliament's proposed compromise amendments to the Omnibus II Directive took place on 21 March 2012. You are reminded that these amendments will be subject to further discussion as part of the trialogue process between the European Commission, Council and Parliament. We will update you in July when the plenary vote is due to take place in the European Parliament.

We publish questions and answers from our industry briefing on 27 February 2012. We have also updated the new February 2012 self-assessment template to address formatting issues identified by users, and the cross-reference to Article 203(2)(d) in Appendix A showing the mapping to the 2010 Contents of Application.

February 2012

We held our industry briefing for firms in the pre-application phase of our internal model approval process (IMAP) on 27 February 2012. During the briefing we introduced the materials and supporting information to assist firms with their submissions for Solvency II approvals, available on our submissions pages. and in a zip file. Speeches and presentations from the event are available on our IMAP page.

January 2012

The vote by the Economic and Monetary Affairs Committee of the European Parliament (ECON) on the Omnibus II Directive that had been rescheduled from 20 December 2011 to 24 January 2012 has been further delayed until 21 March 2012. This is because ECON needs more time to discuss some of the key issues with Solvency II, as divergent opinions continue to be expressed, coupled with continuing pressure on the broader financial agenda of the European Parliament. 

At this stage, we have no information to suggest that the dates beyond 2014 will change. So firms should continue to work on this basis and we will provide further updates as appropriate.

December 2011

Julian Adams, Director of Insurance at the FSA, gave a keynote speech at the ABI’s Solvency II conference on Thursday 8 December.

November 2011

On 23 November HM Treasury released its consultation on the proposed amendments to make UK legislation compliant with Solvency II, which will provide the powers necessary for the FSA to implement Solvency II. The consultation, ‘The Solvency II Consultation Document’, Statutory Instrument and Impact Assessment can be found on HM Treasury’s website.

Consultation Paper 11/22 – Transposition of Solvency II – Part 1 – (CP11/22) the first of our planned consultations to transpose the Solvency II Directive was published on 9 November.

On 7 and 8 November European Insurance and Occupational Pensions Authority (EIOPA) published public consultations on the ORSA and reporting respectively. We have identified issues for the UK industry that we hope will be a useful guide when reading the consultation papers, see reporting (PDF) and ORSA (PDF).

We held our industry briefing for firms in the pre-application phase of the FSA’s Internal Model Approval Process on 3 November 2011. More information is available on our IMAP page.

October 2011

We revise our implementation assumptions in light of the discussions about bifurcation in Europe. 1 January 2013 remains the date at which the responsibilities of supervisors and EIOPA would be switched on (i.e. transposition of the Directive would have to be complete by 1 January 2013) and 1 January 2014 is when the Solvency II requirements would be switched on for firms. We will contact firms individually in the coming weeks to discuss what this means for their implementation plans.

August 2011

On Wednesday 27 July, the Rapporteur to the European Parliament (EP) issued the EP's comments on the current text for Omnibus II. We expect that the next Presidency compromise text of Omnibus II will be published by the European Council in September. At that time we will consider the EP's comments and the Presidency compromise text together, and seek to provide clarity as soon as we can.

July 2011

We publish our external review scoping tool for firms in the pre-application phase of IMAP.

We provide an update for firms in the pre-application phase of IMAP on our development of the quantitative techniques and tools, and use of external review.

EIOPA has announced that XBRL will be the reporting standard for the transmission of Quantitative Reporting Templates. Interested parties are asked to respond to its technical consultation on the XBRL Taxonomy. For more information, please see our Pillar 3 page.

June 2011

We clarify our position in light of the media coverage of a proposed delay to the implementation of Solvency II to 1 January 2014.

May 2011

We have developed some FAQs to support the conference documents. If you have any further questions about the conference or related materials, please email Solvency II Communications and we will get back to you within three working days.

April 2011

Solvency II Conference

Over 500 industry delegates attended our Solvency II conference at the Hilton Metropole in London on Monday 18 April 2011. The conference was aimed at people responsible for implementing the Directive at their insurance firm. Speeches and presentations can be found in the Solvency II library.

March 2011

We publish our QIS5 UK Country Report and update our QIS5 pages with further information. EIOPA’s report is available on the EIOPA website.

February 2011

We publish the qualitative results of our Internal Model Approval Process (IMAP) thematic review on 18 February 2011.

We have a new webpage which may help firms who are currently developing their Solvency II implementation plans.

Our Prudential Insurance Policy team gives an educational briefing to an audience of ratings agencies and market analysts on 14 February.

Solvency II: Educational briefing [PDF]

Hector Sants addresses the Insurance Institute of London on the future of insurance regulation on 9 February. His speech discusses the imminent change to Solvency II, the new regulatory structure we will be adopting and the changes to the European regulatory structure.

January 2011

The European Commission publishes its proposals for the Omnibus II Directive  which will now be sent to the Council and the European Parliament for consideration. The proposals include an amendment to the implementation date of two months to 1 January 2013. For more information please see our European policy page.

The European Insurance and Occupational Pensions Authority (EIOPA) replaces the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). The FSA will be represented on the Management Board of EIOPA by Hector Sants.

Victoria Raffé, Head of Prudential Insurance Policy at the FSA, gives a presentation to Non-Executive Directors (NEDs) about their responsibilities under Solvency II at an FSA event on 25 January. The presentation, although delivered to NEDs, may be useful for all board members.

Solvency II: What does it mean for the Non-Executive Director? (PDF)