Has EIOPA pre-empted the outcome of the Omnibus II debate?
It is no surprise that there have been mixed reactions to the guidelines issued this week by the European Insurance and Occupational Pensions Authority (EIOPA) on the early, but nonetheless mandatory, implementation of parts of Solvency II from January 1, 2014.
These interim guidelines have gone well beyond the expected introduction of Solvency II's narrative information, to include a significant proportion of the quantitative reporting templates that would apply once Solvency II finally comes into force such as the Pillar 2 risk and governance requirements and some aspects of Pillar 3, the reporting requirements.
This interim solution will impact most of the insurance industry given that EIOPA are proposing that the annual reporting templates are to be provided to local regulators by 80% of the market and the quarterly templates by 50%. This could result in substantial increased costs for many insurers - especially when these new reporting requirements are applied in addition to their existing reporting obligations. For example, will the UK's FSA forego its current FSA Returns in favour of the new Solvency 1.5 regime? If not, UK insurers could find themselves having to complete both the FSA Returns and the new interim Solvency II templates and to shoulder the associated costs of both.
Given that the long running 'political negotiations' over Omnibus II - a key package of amendments to the Solvency II directive - are still ongoing, we can't help but question if EIOPA is intent on interfering with the policy-making process and pre-empting the outcome by issuing such far reaching guidelines. Surely, it is only when the outcome of the Omnibus II debate is known that interim measures such as the ones being proposed should be applied to regulatory reporting and not before?
Yet again, EIOPA seem to have jumped the gun in their desire to rail-road through their overly-complex Solvency II regime. How many more false dawns must the European insurance industry have to endure before someone calls time on this farce?