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EIOPA today published a report assessing a possible package of measures to facilitate the provision of insurance products with long-term guarantees under the new Solvency II insurance regulatory regime. The Council, the European Parliament and the Commission mandated EIOPA with producing this study in 2012, in order to provide a basis for a political agreement on Omnibus II. The European Commission welcomes the publication of this report.
Internal Market and Services Commissioner Michel Barnier said: "The Commission trusts that the Council and Parliament will use this very good report and its findings as a basis for an urgent agreement on Omnibus II and show pragmatism and willingness to compromise. The insurance sector needs Solvency II to be applied as soon as possible, since the existing Solvency I regime is outdated and provides insufficient security, and the long-term guarantee package is the only major remaining hurdle."
Background
The Solvency II Directive, introducing a modernised risk-based regulatory regime for the insurance sector in the EU, was adopted in 2009 (see IP/07/1060 and IP/09/621). However, the current environment of low interest rates and low asset values, which developed largely after the adoption of Solvency II, is challenging for insurers offering long-term guarantees (mainly life insurers), and requires some adaptations to the Solvency II requirements.
Therefore, before Solvency II can be applied, a package of measures for insurers issuing products with long-term guarantees (the LTG package) needs to be incorporated in the regime. This is to be done via a draft Directive known as “Omnibus II”, currently in discussion in Council and Parliament. Due to the complexity and diversity of the types of insurance products offered across the EU involving long-term guarantees, finalising the LTG package has proved challenging. It was for this reason that the co-legislators and the Commission mandated EIOPA to test several options for the different measures in the LTG package.
EIOPA has published its report today, with clear conclusions on the different measures of a possible LTG package, which will require a number of components in order to function effectively in all the EU Member States.
The key elements evaluated by EIOPA include:
The Commission considers that the findings of the report, along with the Commission’s own report on it, which will shortly be available, should form the basis for discussions to enable a deal to be found on Omnibus II, on which trilogues will restart very shortly. In light of European Parliament elections next May, an agreement on Omnibus II is sought this autumn.