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The decision to depart from the preparatory measures set out by the European Insurance and Occupational Pensions Authority (EIOPA) was approved earlier this month. Critics will say the Autorité de Contrôle Prudentiel et de Resolution's (ACPR) move demonstrates the limits of EIOPA's promise to ensure consistent preparation towards Solvency II across Europe from 2014.
The ACPR claims that legislation must be changed before it is able to impose the interim guidelines on systems of governance on firms. "The law is going to be changed for transposing Solvency II [before March 2015] and it would be difficult to do it twice in such a short period", says Romain Paserot, director of cross-functional and specialised supervision and head of the Solvency II project at the ACPR.
EIOPA's guidelines are aimed at supporting national regulators and insurers in their preparation for Solvency II and include measures relating to systems of governance, forward-looking assessment of an insurer's own risks, and the submission of information to national regulators. National regulators are expected to adopt the guidelines in 2014 or explain why they have not done so.
Despite the formal delay in complying with governance rules, the ACPR promises to put pressure on firms to step up their preparatory efforts and be fully compliant with governance rules by January 1, 2016 when Solvency II will apply.
Most firms, says Paserot, are on track to meet requirements on governance, but more clarity on how the rules will be adjusted and applied in France is needed before the work is completed. A case in point is the definition of administrative, management and supervisory bodies (AMSB), which will be given in the transposition document.
The French supervisor is also concerned about the state of preparedness of small firms, most of which fear the burden of compliance might be too heavy. The ACPR has issued a paper explaining how small firms can put in place internal controls that are proportionate to their scale.
The ACPR's ORSA exercise is another example of how France is diverging from other European nations. EIOPA expects supervisors to request undertakings to provide calculations on their present solvency needs alone, but the ACPR will ask for a full ORSA, including figures for the deviation between a firm's risk profile and the standard formula as well as a forward-looking assessment on the ability of the firm to comply with Solvency II's quantitative requirements in two years.
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