Recent developments/current issues
The solvency margin is the minimum excess of an insurer's assets over its liabilities set by regulators. A limited reform of EU-wide solvency requirements ("Solvency I") was approved in 2002. After lengthy discussion, a framework directive setting out new solvency rules ("Solvency II"), which take more account of modern risk management techniques and prudential standards, was adopted by the European Council and the European Parliament in November 2009.
There have been a series of delays in approving the legislative measures required to implement Solvency II. In July 2012, an EU Directive was adopted delaying the date that firms would have to implement Solvency II to January 2014.
The European Parliament has rescheduled again its plenary vote on the Omnibus II directive, which will adapt the Solvency II directive to take account of changes in the EU’s institutional structure and will also set the date of entry into force of the Solvency II regime. According to the Parliament’s latest forecast the vote on Omnibus II is now scheduled for October 2013. The delay is linked to the possible need to amend the Omnibus II directive in order to take account of the effects of Solvency II on insurance products with long-term guarantees. EIOPA launched a study into this issue in January 2013, aiming to publish the results in June 2013.
The repeated postponement of the vote in the European Parliament has led to widespread speculation that the date of full implementation of Solvency II will have to be postponed beyond 2014, perhaps to 2016.