FSA Business Plan for 2012/13 - probably a quiet year...

The FSA fired out their business plan for next year today. Of interest for the insurers amongst us is p30;

• We will extend our work with the largest firms to deepen our assessments of insurers’ business models and their resilience under a range of conditions.We will maintain our focus on understanding the financial impacts of stressed market conditions, including through use of standardised stress testing and reverse stress testing.
• As part of our supervisory work on Solvency II, we will continue our assessment of firms’ progress towards meeting the new standards, including through detailed reviews of insurers’ risk management arrangements and proposed internal models

Specifically on the Solvency II front (p32)

Continue to work with the Treasury, the European Commission and EIOPA on the negotiation of Omnibus II, Level 2 and Level 3 of the Solvency II directive;
Continue to work with the insurance industry to keep firms up to date with policy developments so they can effectively prepare for implementation;
Conduct our consultations to transpose Solvency II into UK rules and a new draft Handbook by 1 January 2013;
Develop and deliver the design and build of the processes required for implementation on 1 January 2014 and beyond, where policy developments allow us to do this;
Work with firms on the implications of the change from a paper based to an electronic reporting process;

Deliver the required training and support internally and externally.
Provide UK-specific regulatory reporting templates, with supporting systems and materials for firms and FSA staff to complement the EU-wide material; and

Finally, on page 51

• We will continue to reform our conduct regulations, where necessary, to implement the requirements of the Solvency II Directive while maintaining appropriate levels of consumer protection. The bulk of this work is expected to be in relation to our rules on permitted links (COBS 21) and on with-profits (COBS 20), with the revised rules intended to be included in the Handbook at the start of 2013. Some aspects are dependent on the completion of work currently being carried out by EIOPA.

Pretty quiet year ahead then all in all...

Julian Adams speech on IMAP and Solvency II delay

The speech from Julian Adams is worth picking apart for crumbs of comfort for any organisation who will be potentially running up bills for another 12 months in light of the extension announced by the FSA at the start of October for their IMAP processing.

Spectacularly, one of EIOPA's guest attendees was, you've guessed it, delayed! As I didn't attend, I cannot confirm if this raised a chuckle in the hall, but more important than the comedy value of an unexpected EIOPA delay are the things put on the table last week, namely;

• That the workload anticipated by the FSA both pre and post Solvency II appears to be higher than anticipated (more entity level ORSAs/SFCRs than expected for a start).
• "...very likely that some form of Solvency II reporting will be required during 2013", regardless of the delay.
• "Submission slots" were allocated primarily after assessment of each applicant's SAT, but alos taken specific Solvency II outstanding issues into account (which must mean preparation on the college of supervisors front is severely lacking to be cited here alongside matching premiums! This is not necessarily a UK failing however)
• No more applicants will be accepted for day one approval just because of the delay, and no changes to model scope will be allowed without express permission.
• More to come "in coming weeks" on the big question about whether ICAS can be jettisoned by the industry for 2013, to be replaced by a provisionally approved model - also doesn't cover if Standard Formula firms will have the same option open to them as, say, the Lloyds syndicates and other lobbyists for a 2013 early start.

More to come soon apparently, so let's keep our eyes peeled!

FSA Deadline for IMAP - formal extension to "mid-2013"

After a week of innuendo and winks, the FSA have finally committed to removing the deadline for IMAP submission from end of May 2012 to "mid 2013" for anyone who needs the extension, with allocated slots being issued "which we and they must stick to" instead.

This has a whiff of issues around Group supervision, with the word 'group' standing out amongst the other criteria depicted that will determine allocation slots.

The press release of course confirms 2014 as the official go-live date in the UK, leaving 2013 as a parallel run year at this juncture (summarised in Actuary Mag). There will surely be a few dummies spat out at this, as this is very much a penalty for any early adopters or successful project managers.

This may have increased the likelihood of Lloyds et al's requests for approval to start using the model from 2013, as they will surely need to be thrown a bone after this news.

PS - More for the industry's benefit, or for the institution that is struggling to stay staffed?

Central Bank of Ireland - Solvency Matters number 5

Still a touch light from a forward looking perspective, the Solvency Matters bulletin from the Central Bank of Ireland. As well as a few reviews of activity already long passed, they "strongly recommend that your working assumption should be that the implementation date of Solvency II remains 1 January 2013... This is what we continue to aim for in the Central Bank of Ireland"

Solvency II Delay to 2014 - bit firmer?

From the same rapporteur that was responsible for yesterday's blog post on Omnibus II text changes, Insurance Times are reporting that Burkhard Balz has issued a report which supports the June Omnibus draft direction of a desire to phase-in Solvency II implementation throughout 2013 (with regulatory reporting requirements kicking in at the half year).

Haven't located the report as yet, but will post when available

ABI supports FSA Solvency II stance - 2013 regardless

Peter Vipond (Association of British Insurers head) is quoted in InsuranceERM today as supporting the FSA's "2013 regardless" stance for Solvency II implementation.

The logic is cold but impressive, as not only is the ICA process already onerous enough to dismiss any kind of parallel run, but the Internal Model application process has been structured to deliver concrete decisions on admissability by Jan 2013.

Certainly don't fancy the FSA's chances of getting a 2013 Solvency II "parallel run" levy out of the ABI based on this statement!

PS Shouldn't have access problems, the InsuranceERM guys made this one free!

Solvency II timeline changing - 2014 anyone?

Not sure who the moles are in either London or Brussels, but there appears to be some water-testing ongoing about a soft launch of Solvency II over the weekend, with the FT reporting that "people familiar to the process" have it chalked down for implementation in 2013, but not active until 2014.

I can't quite work out if there is some confusion over transitional measures already in Omnibus II just being regurgitated, or if they have a genuine sniff of a shift in timeline here.

They interestingly note that the French had previously asked for a 2013 launch, with a year's grace on Pillar 1, and that this had made it on to the table at the Commission.

[Apologies in advance if you cannot link through, some of these are subscription/limited access]