03 July 2008

MEP Skinner: Solvency II - The next steps

Some 800 amendments are registered on the Commission proposal. However, the rapporteur is optimistic in finding agreements on open issues such as ‘surplus funds’ and ‘group support’.

Finally, the ball is well and truly rolling and the amendment stage to the report in the European Parliament is under way. To date, around 800 amendments are registered with the official services of the European Parliament, all awaiting legal checks and interpretation into the relevant 20 languages of the European Union. As the Rapporteur, I am not daunted by this fact - instead, I feel rather impressed that so many members have taken the opportunity to address their support and concerns to a vital piece of financial services legislation.

 

The next phase is the exchange of views in committee, which is likely to be on 15 July, and then a further exchange in September, after the summer break (which lasts a calendar month - unlike Westminster). The number of amendments and their complexity will dictate the timing, as well as the number of exchanges in the Parliamentary Committee which is necessary. A vote in committee in October just before a plenary vote of all MEPs should conclude an epic journey for this regulation of EU insurance law, which has to be introduced by every EU nation by at least no later than January 2012.

 

Clearly there have been areas of contention between Member States on issues which have also been reflected inside committee, but the overall impression is that of increased momentum to get the right kind of proposal which could work - and which could deliver an approach which is economics-based, principle-based and risk-based.

 

Whether surplus funds or equities, there is a good feeling about resolving any impasse and although it will be tough to agree on a flexible interpretation of real economic values, it will be necessary to get one - and to get it just right – for the sake of consistency. On group support, European regulators have differing opinions (which has been no surprise to legislative watchers of the EU debate); however, the relationships of regulators and their interpretation of the support mechanisms necessary are becoming easier to understand and, therefore, more likely to be resolved.

 

There is always a solution to be proposed and there have been some interesting attempts to lift minds away from their own individual interests to more common ground. Group support has certainly been a hot subject in the Parliament but between the lines I have noticed a growing need among members to compromise the hardline views of some. The idea of a ‘collegiate’ style of supervisory involvement has been a marker along the road to gaining support.

 

Beyond what the EU has to do is what companies outside the EU can hope to secure from the Directive. The truth is that non-EU companies operating in Europe will have to be recognised as operating in a similar regulatory regime to that of the EU - if so, then the economic benefits can be of great importance; the USA in particular is making some of the right noises at the moment, but still remains unrecognisable as a potentially equivalent regime.

 

Solvency II is alive and well, and the European Parliament is playing the vital role that it should in both scrutinising the law-making process and, of course, in amending it so it can recognised as more than just an agreement between industry, regulators, Commission and government departments

 

By Peter Skinner MEP, Labour MEP for South-East England. The article was published in Cicero Policy Briefer, 26 June 2008.

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