CEA welcomes formal approval of Solvency II Framework Directive by EU finance ministers
The CEA, the European insurance and reinsurance federation, has welcomed today’s formal approval of the Solvency II Framework Directive by the EU’s Economic and Financial Affairs Council (Ecofin).
This final hurdle was the last stage of approval required prior to implementation. The Solvency II Framework Directive was agreed informally on 26th March by the Committee of Permanent Representatives. The European Parliament then voted in favour of the directive on 22nd April. The directive is due to be transposed by 31st October 2012.
“The new regulation’s focus on more sophisticated risk management is great news for the insurance industry and consumers,” said Michaela Koller, CEA director general. “Solvency II incentivises insurers to use the most advanced risk management practices, which means greater consumer protection. This is welcome news in these times of economic crisis.”
The regulation is also beneficial for policyholders because the capital that insurance companies are required to hold is more closely linked to the risks the insurers face. Promoting the optimal alignment of capital and risk among insurers will also affect how insurance products are designed and priced, stimulating the creation of more innovative and competitive products.
Furthermore, Solvency II introduces harmonised disclosure and reporting requirements for Europe’s insurers, providing more transparency and comparability for insurance buyers across Europe. Harmonised solvency regulations in the EU will also foster a single market, thereby encouraging more competitive pricing and increasing the scope for European-wide products.
“European insurers are delighted that the modernised regulatory system that they have long advocated will now become reality,” said Alberto Corinti, deputy director general of the CEA. “Solvency II represents a huge leap forward, creating a harmonised, risk-based regulatory regime for Europe.”
“We look forward to presenting Solvency II to insurance regulators around the world, as the global debate continues on enhancing supervisory regimes and policyholder protection,” added Koller.
Solvency II is a Framework Directive, and preparatory work is already underway on the Level Two implementing measures that will provide the detail of the Directive. The CEA is contributing to the consultations on these measures, to ensure that the best possible supervision of Europe’s insurers is achieved.