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New Solvency II rules had been due to come into force by January 2013. This has now been pushed back to January 2014, with regulators expected to “transpose the Directive’s rules into national law” within the original timetable and ensure readiness over the subsequent 12 months.
Julian Adams, the FSA’s director of insurance, told industry executives gathered at a regulatory briefing that this change to the timetable is “emphatically not... a wholesale delay in the implementation date”, not least because firms will be expected to demonstrate “some form of Solvency II reporting” from January 2013.
This has given rise to concern amongst insurers that they will be required to comply with two capital reporting regimes at once, given that they will also need to comply with UK-specific Individual Capital Assessment reporting rules, which will remain in force until full Solvency II implementation.
However, Mr Adams said that the FSA’s intention is “explore with firms possible ways of avoiding the costs associated with the dual running of an ICAS and Solvency II model, while continuing to secure a degree of policyholder protection”. He said: “This could include investigating whether, where we are minded to approve a firm’s model, such a model could be used to demonstrate satisfaction of some or all of a firm’s ICAS requirements”.
He added, though, that the regulator will not “remove from firms the current obligation in our handbook to keep their capital position under review and to make use of their model in reaching business decisions”.
Mr Adams said that full details of requirements for Solvency II reporting before January 2013 will not be provided until the Omnibus II Directive is finalised, which he said was expected in the first quarter of 2012.