Risk.net: National supervisors behind in Solvency II preparedness
09 October 2014
There are "huge differences in the preparedness" for Solvency II among European national supervisors and certain authorities will have to undertake a "fast journey" to be ready for the implementation of the directive in 2016, according to Eiopa.
Jarl Kure, principal expert at Eiopa, told delegates at Insurance Risk Europe on Tuesday that regulatory convergence across Europe is still a long way away as some jurisdictions are lagging in implementing Solvency II. He added that while the publication of guidelines for the preparatory phase in October 2013 has helped supervisors' understanding of the requirements, "there is still a lot to do".
Preparatory guidelines were issued on the preparation of firms' forward-looking assessment of own risks (in preparation for the Solvency II-mandated Own Risk and Solvency Assessment), pre-application for internal models, the submission of information to national competent authorities, and internal system of governance.
The guidelines were designed to bridge the gap until formal Solvency II implementation and to give supervisors and firms a stronger understanding of what will be required of them under the new regime.
An "enormous" number of questions put to Eiopa after publishing the guidelines have been about the submission of information expected of firms, said Kure. "There are a lot of questions on definitions, on what we are talking about, even though this guideline was several hundred pages long. There is a lot of uncertainty here still," he explained.
Kure also alluded to the delay in the publication of the delegated acts, also known as the level 2 text, by the European Commission as a reason behind the struggle for convergence. "We are all waiting for the delegated acts. The last I heard these should be [published] this week," he said.
One of Eiopa's objectives is to promote supervisory convergence across the European Union. However, Kure said the authority lacks a "mandate" to enforce harmonisation. The authority is empowered by the European Commission to promulgate guidelines that national supervisors are encouraged to follow, but is unable to compel compliance.
In the absence of legal powers to force convergence, Eiopa is trusting in a range of its own initiatives. These include peer reviews so national supervisors can learn from one another's practices, the creation of an Eiopa-based centre of expertise on internal models that national authorities can refer to with questions and concerns, and the drafting of a supervisory handbook.
© Risk.net
