Solvency II: A train with no real destination and an uncertain arrival time...
In its infinite wisdom, the European Parliament plenary meeting to consider the Omnibus 2 amendments to the Solvency II directive has been moved back from mid-June to late-October 2013. While no official explanation has been given for this (further) delay, we can only assume that this stems from the fact that the review on the impact of Solvency II on products with long-term guarantees remains incomplete.
That this plenary session has been delayed should come as no surprise to anyone who has followed the implosion in, what now appear to have been, an overly ambitious effort to reform the European insurance regulatory system. While the industry has been expecting for some time that a delay would be inevitable, it is still disappointing that the opportunity has not been taken to provide a clear timetable for the remaining process to make Solvency II a reality.
In addition, yesterday's rescheduled plenary vote means that a second 'quick fix' directive may now need to be put in place quickly, as the transposition of Solvency II into national legislation by the end of June 2013 is clearly impossible. This interim step should amend both the transposition and implementation dates and will therefore hopefully end the speculation around the actual implementation date. If this will indeed be the case remains to be seen.
While European insurers have become fatigued by the many delays that have occurred throughout the past decade the discussions, as to whether the Directive will ever become a reality in its current form, are becoming more vocal. A clear timetable is now needed on the remaining steps if EIOPA are to re-energise the industry's appetite for the new regime.
Given the steps that will be required to put the Level 2 and 3 requirements in place once Omnibus 2 is finally enacted, a good working assumption is that industry compliance will now be moved to 2016 (at the earliest) but even this deadline this is far from certain as Solvency II remains a train without direction and without a clear arrival time.