Get ready for Solvency II… all over again
As an ex-insurance journalist who launched a title directly covering insurance capital management, the news that Solvency II, Europe’s grand project, has been resuscitated by EIOPA and has a new deadline of 1st January 2016 was one of the more interesting announcements of the past couple of weeks.
Solvency II saturated the insurance media agenda for much of 2008-2012. Media interest has trailed off, however, over the past 18 months as many people had expected the European Commission to either cull the whole project altogether or, more likely, roll out a Solvency II ‘lite’ version with reduced obligations and/ or something just aimed at ‘systemically relevant’ institutions.
Solvency II’s initial deadline had been 1st January 2013. While a number of Europe’s larger insurers have so far spent millions on meeting compliance, many thousands were seen to be behind the curve and unable to meet the costs, levels of staffing and/or stringent criteria that Solvency II demands. According to Insurance Europe (in my day, better known as the CEA), there are circa 5,000 firms undertaking insurance activities in Europe.
From a communications and PR perspective, my forecast is that Solvency II will reappear in the papers with gusto, once again becoming the core talking point. Given its importance, this is to be wholly expected and appreciated. Given also that some aspects of Solvency II will need to be modelled before 2016 – such as the ORSA – expect to see lots of news, articles, surveys, events and discussion pieces in the New Year.
From a wider point of view and notwithstanding grandfathering arrangements that may blunt the full impact of Solvency II into 2020 and beyond, there is still a debate to be had about whether Solvency II is the right thing for Europe’s fragmented insurance market and how it will support – or not – other industry initiatives such as IFRS 4 Phase 2 (which covers insurance contracts).
It is therefore unsurprising, in my view, that some commentators are once again talking about a wider, possibly global initiative under the banner of Solvency III…