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MAASTRICHT, Netherlands — Solvency II likely will be implemented by 2016 now that regulators have issued guidelines for some of the contentious portions of risk-based capital regulation for insurers and reinsurers in Europe, and now that three-way discussions between the European Commission, European Council and European Parliament are under way, according to Karel van Hulle, the former head of pensions and insurance at the European Commission.
Insurance remains the only major sector of the worldwide economy for which there is neither an international accounting standard nor an internationally agreed solvency framework, said Mr. Van Hulle, who retired from his role at the European Commission in March and is now a university lecturer.
Addressing delegates at the Federation of European Risk Management Associations' forum in Maastricht, Netherlands, Monday, Mr. Van Hulle said there is a growing awareness throughout the world, not just in Europe, that a risk-based insurer solvency regulatory regime is needed, but also certain problems to overcome in achieving such a goal.
For example, said Mr. Van Hulle, insurance regulators typically have fewer resources than their banking counterparts.
The global financial crisis that began in 2008 contributed to delays to the progress of Solvency II, noted Mr. Van Hulle, as regulators shifted their attention to banking reform, which was viewed by some as more urgent than revision of insurance rules, among other factors, he said.
In addition, the change of European insurance regulator to the European Insurance and Occupational Pensions Authority from the Committee of European Insurance and Occupational Pensions Supervisors also contributed to delays in the progress of Solvency II.
But the publication in June by EIOPA of proposals for the treatment of long-term guarantees under Solvency II — an issue that had held up negotiations and been the subject of intense lobbying efforts by insurers — has helped to further discussions about the upcoming Solvency II framework, he said.
Three-ways discussions between the European Commission, Council and Parliament are likely to end next month, and EIOPA in 2014 will give national supervisors guidelines on preparations for Solvency II, he said.
This means that Solvency II likely will come into force in 2016, he said.
Jorge Luzzi, president of FERMA, said that delays to Solvency II could create further uncertainty for risk managers that operate captives that may come under the rules’ scope.