Bermuda and Switzerland first to be assessed for SII equivalence
Bermuda and Switzerland - favoured domiciles for many international (re)insurers - are first on European regulators' list for granting Solvency II equivalence to non-EU countries.
If they achieve equivalence it could create a comparatively reduced compliance and capital burden for (re)insurers domiciled in those countries.
The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) identified in draft advice published last week (15 July) that among 50+ jurisdictions, Bermuda, Switzerland and the US are the most important.
Japan and Barbados have been identified as of medium relevance, with Turkey and Hong Kong also mentioned.
It is the first time that the Frankfurt-based committee has set out the countries that it is most likely to focus on for the first wave of equivalence assessments.
However, the decision does not guarantee that these regions will "win" equivalence.
The US is a case in point because of the difficulties of assessing its state-based system of insurance regulation, which means dealing with 50 different authorities.
CEIOPS said in its draft that, given the resource commitment involved, it is clear that an assessment in the US "is some way off".
"For equivalence to be determined for the US as a whole, CEIOPS members would need to explore the possibility of a joint agreement with the US state supervisory authorities collectively," the document states.
Nevertheless, CEIOPS said the survey made it clear that the US, Switzerland and Bermuda are all home to significant groups active in the EU. Groups from Canada, Japan and Australia also have a presence.
Of these six countries, Switzerland has introduced a full group solvency regime and Bermuda has indicated that it proposes to have a regime equivalent to Solvency II in place by 2012.
The European Commission wrote to CEIOPS last month outlining a timetable for equivalence assessments and priorities. Further equivalence assessments will be carried out subsequent to the first wave - the EC has asked CEIOPS to produce fully consulted-upon final advice on other countries by the end of August 2010. Stakeholders have until 13 August to respond.
Solvency II is a risk-based system set to take effect in January 2013 across the European Economic Area.
According to CEIOPS, the overarching aim of the equivalence assessment should be to ensure that the country being considered has a supervisory regime that ensures a similar level of policyholder and beneficiary protection to Solvency II.
The committee is focusing on whether the countries already have a risk-based supervisory regime in place.