Insurance Europe writes to EIOPA head warning of ‘unnecessary costs’
Trade body Insurance Europe has written to the European Insurance and Occupational Pensions Authority (EIOPA) head Gabriel Bernadino opposing Solvency II’s interim quantitative reporting requirements and warning that they could result in “unnecessary costs”.
The open letter, which was signed by Insurance Europe’s deputy director-general Olav Jones, said that if trialogue parties (the European Commission, Council and Parliament) were not included in such measures, it ran the risk of interfering with the policy-making process itself while the Omnibus II discussions are ongoing, and pre-empting the outcome.
Omnibus II is a key package of proposed amendments to the Solvency II directive. The contents of Omnibus II are still being negotiated.
The letter said: “In all these interim measures, it is essential that regulators focus on limiting the cost of Solvency II to insurers and their policyholders, otherwise the costs of Solvency II will become apparent long before the benefits, and there is a real risk that the project will fall into disrepute.”
The letter said that only when the outcome of Omnibus II was known could the focus turn to what, if any, interim measures should be applied to reporting.
It said this would depend on when Omnibus II is finalised, what is decided, and the timetable for implementation.
“Even then the implementation ought to be done in application with the proportionality principle and over a reasonable period of time to allow firms to make the necessary change to their reporting processes and systems,” the letter said.
“It is important to acknowledge that interim measures are not a phasing in of Solvency II, and that additional information collected during this period should not lead to rules other than Solvency I being used to determine capital requirements. Interim measures should not lead to a de-facto implementation of Solvency II before it becomes legally enforceable.”
KPMG insurance director Janine Hawes told Global Reinsurance the contents of the letter came as no surprise as nobody wanted increased costs but they wanted to the process to be done in a proportionate manner.