Tuesday, 14 October 2014

Solvency II Delegated Acts - Commission publish, world shrugs

Delegated Acts - handle with care
On Friday, the European Commission  released a "provisional" version of Solvency II's Delegated Acts via their own website.

Given how long they have taken to arrive, they rather surprisingly aren't chiselled into pyramid slabs or written on parchment - less surprisingly, they feature very little in the way of changes since the July 2014 version, so for those who want to know why it has taken 3 years for these to officially emerge, the January 2014 version is a better contrast (I summarise some of the changes between 2011's starter document and the January version here).

There has been enough comment since Friday (here, here, here and here for a start) to highlight what has changed since the summer, and more importantly, what has driven those changes - namely, encouraging EU insurers to plough money into long-term infrastructure assets by making them cheaper from a capital perspective, thus solving the European Union's economic woes in one fell swoop!

Bear in mind the first scrounging letter from the Commission came to EIOPA over two years ago, reminding them of what a "...potentially powerful financing channel" European insurers could be, provided any necessary "...adjustment or reduction" was made to Solvency II's capital requirements.

Little wonder then that it has taken a while for them to ensure that Solvency II remains prudential, while simultaneously unlocking long-term capital pools, though it sounds like the empirical basis of EIOPA's earlier calibration attempts has been overriden to get there.

Is it likely to get through the baying mob in ECON? The insurance industry's Green Party sparring partner had already flagged his distaste at the capital discounts now being offered, as well as the due process applied to recalibrating them.

It remains to be seen whether it is controversial enough to delay the inevitable in early January, but given the Acts seem to have been received with customary ambivalence by most affected parties, this is probably 'job done'.


  1. In howfar do you expect resistance from the parliament? As I understand the process, it only has a veto power, insofar I would be surprised if it could force any concrete changes.

  2. Hi Owe, as Sven Giegold notes in his blog post (link above), Parliament does have the right to veto Delegated Acts.

    I tried to cover some of the finer detail on how the passage of the Treaty of Lisbon has changed the decision making processes in EU institutions a few months ago (link below) - in extreme cases, the "delegated" power given to the Commission can even be withdrawn ;


    I expect it won't be the case, but given this is virgin territory, I wouldn't rule it out!

  3. Hello Alan,

    Do you happen to know if Commission is planning to make public Annexes to Delegated Act also in Excel form (or at least some of them - CAT risk correlation matrixes) not only in the pdf as they are now?


  4. Hi Ondra, doesn't appear so - they don't appear to be in the habit of publishing items which are not in PDF (possibly a good idea, given they are not signed off yet!)

    No doubt you can copy-paste, then separate by "space" using the "Text to Columns" facility if you desperately need to use the matrix in Excel, otherwise you may need to wait until January, when they get approved