Solvency II deal ‘much closer’ because of political impetus
A leading member of Solvency II discussions has told The Insurance Insider that there is now a "political will" among the key players in the debate to finalise a deal on implementing the regulatory framework.
Peter Skinner MEP, the current rapporteur for Solvency II, said the European Union was "much closer than in the very recent past" to an agreement.
He said that, talking to stakeholders in the dialogue, there was "a fresh feeling that we can't go back to Solvency I and of let's get something done".
Skinner, who also chairs the European parliamentary insurance caucus, said he anticipated pragmatism from all EU members when the report on long-term guarantee products (LTGPs) comes out on 16 June.
The European Insurance and Occupational Pensions Authority (Eiopa) commissioned a study into the treatment of LTGPs, after it emerged German insurers had a large back book of annuities that guaranteed payouts to buyers.
German negotiators argued that if Eiopa were to mandate that all such assets be matched against liabilities, many life insurers might be technically insolvent in the context of a low yield regime.
Any coming deal would involve a compromise that allowed a matched premium adjustment for some annuities that cannot be exited early.
The departing deputy governor of the Irish central bank, Matthew Elderfield, said on 9 May that there was "acceptance, but by no means universal acceptance," of such a compromise.
Referring to the final segment of negotiations, Skinner said: "Politically, all characters want to see it through."
He said that the finish line was nearer because EU parliamentarians were now playing a more "vigorous" role in pushing negotiations forward.
He said Eiopa's decision not to impose Solvency II-style capital requirements on pension funds was "extremely important". It showed that authorities understood the technical difficulty of treating different products in the same way, he said.
He admitted that 10 years was a long time for the directive's transition, but said it had taken time to recognise and understand the arguments on many different issues.