2009-04-01

By Editor, CIR

An overhaul of the regulation for insurance companies within the European Union has moved a step closer, after getting the green light from Brussels.

The legislation, dubbed Solvency II, aims at harmonising the levels of capital that insurers must hold and has been promoted as offering economies of scale for larger companies.

Following a deal between EU lawmakers and member states, the new regime is due to get formal approval from the European parliament later this month, and from EU finance ministers in May.

"This is a decisive step towards the new, enhanced regulatory regime that we have been seeking for Europe's insurers," said Michaela Koller, director-general of European insurance federation the CEA.

However, proposals to alter the way way cross-border insurance groups are overseen were rebuffed. These would have seen the capital they are required to hold being assessed at a group level -- rather than on a country-by-country subsidiary level -- with 'home' supervisors where the companies are based responsible for the assessment.

Although supported by UK, France and Germany, whose major insurers supported the plan as it would streamline reporting requirements and cut compliance costs, it ran up against opposition from many of the EU's smaller member states.

Despite its disappointment at this setback, the Association of British Insurers expressed support for the directive, "which will ensure that the risk-based approach adopted in the UK over the last five years will now be applied across the EU".

Home     More News


Other stories you may find of interest:

IUA: Don't 'gold-plate' Solvency II
The FSA has been warned that additional regulation is not needed and will jeopardise the UK's status as a business location

FERMA voices reservations over Solvency II
Its new president says European insurance buyers still have concerns over the new capital adequacy regime

Towers Perrin: Solvency II clock ticking
This week represents a milestone in planning for Solvency II, says Towers Perrin