An online repository for Solvency II, ERM and Corporate Governance material and comment from the Principal of Governance Matters, an independent Risk Consultancy firm based on the Isle of Man.
I mentioned that back in June that, as part of the EU-wide informal Solvency II shutdown, that I had fired off a couple of notes to various EU bodies to see whether or not a second "Quick Fix Directive" would be needed, or if the Commission were going to start proceedings against anyone who hadn't transposed Solvency II into national law (given that, after the 30th June, this was, on paper at least, a possibility).
That said, I was surprised and delighted to receive a reply from Dr. Wiedner on the matter today (below), albeit with an "after the Lord Mayor's Show" feel about it! In it he acknowledges that the threat of proceedings is indeed a viable one, but one which of course wouldn't be pursued in light of Quick Fix 2 (we'll work on the premise that it will sail through co-decision!).
So if you want your bureaucratic doors opened gently and without haste, you know where to come!
So despite my best baiting at the start of the summer, it has taken until this week for the big news regarding Solvency II to emerge, namely that, via Quick Fix 2, a layer of formality is likely to be given to the year 2016 as the "go-live" date by the European Commission, provided this draft Directive gets safe passage. Apparently, assurances were given by the co-legislators (p3) that this should be enough time to get it done.
Let's have a look at what exactly has been pushed out, and by whom;
Commission - statement from Michel Barnier
- "The Commission [on 2nd Oct] at my request put forward a draft Directive postponing the application date of the Solvency II Directive to 1 January 2016"
- Current trilogues are "progressing well" and an agreement between the co-legislators is "within reach", which seems to tally with Gideon's report from last week - the Council's "state of play" meeting is still scheduled for 15th October, which being prior to that last trilogue meeting, may help all parties.
- Mr Barnier "...has always wanted rapid application of Solvency II", in case anyone thought otherwise.
- EIOPA's LTGA report is an "excellent" one, in case anyone thought otherwise.
- Postponement done "...only after obtaining assurance from the Council and the Parliament that they would not further change this new application date of Solvency II"
Consultancies
- Apparently KPMG reckon that the industry is breathing "...a sigh of relief", while PwC reckon the date set is indicative that Omnibus II will be settled "...ahead of the Parliamentary elections in 2014". Deloitte's finest highlights that the extended transposition period (effectively doubled) will aid NCAs in giving permission to arbitrary things such as day-one model applications, USPs etc.
Lobbyists
- Insurance Europe don't like it! Still seen by them as an "ambitious timetable", which will lead to a "...significant increase in costs for the industry", which makes one think that the "sigh of relief" heard by KPMG was their own relief at securing two more years of advisory cash...
How much scope is there for something to go wrong now, given the benevolence/pragmatism of the Commission in granting this two year kick-on? Chris Finney covers that off here, most pointedly with the fact that a number of the co-legislator top-dogs giving their "assurances" may have gone to pastures new well before 2016.
We are a good week down the line since Solvency II technically became a rolling ball, at least from a 'transcription into national law' perspective, and the party has barely stopped around the EU...
Man from Del Monte - he says 'Non-Compliant'
Joking aside, the wonderfully obscure lobbying miscreants at ICODA released findings (expanded on here) of a straw poll they had issued to all member states around their preparedness to implement both Solvency II and EIOPA's interim measures. Not even half of those polled responded, and only 6 responded in full, so the sample isn't ideal. That said, there are enough seeds of doubt sown by the responses to grow a Del Monte-style orchard of non-compliance by next year.
As one would have anticipated off the back of the last-ditch attempt to secure a second 'quick fix' Directive, there would appear to be major concerns around NSAs meeting the requirements as at 1st Jan 2014, for example;
All respondees are in favour of 'Quick Fix 2'
40% don't feel adequately prepared for ORSA obligations
Half are not prepared for internal model pre-application obligations
A quarter are not prepared for submission of information obligations
Is 'Quick Fix 2' simply being seen by some of the straggling NSAs as an opportunity to postpone the inevitable rather than to actually prepare for it, thus avoiding the decadent yet ultimately unnecessary project spend of the early adopters? Indeed, is 'Quick Fix 2' even legally possible now that the date for transcription into national law has passed?
I took the opportunity on Monday 1st July to contact representatives of note to ask where the legislation currently stands, specifically around the potential for retrospective 'Quick FIx 2', and received the following cavalcade of replies in the last 7 days;
EU Commission - nothing
An EU Parliamentarian heavily involved in Solvency II - nothing
EIOPA - a holding e-mail thanking me for my question
I hope that world exclusive information helps you all with your preparations!
Late post-script - I didn't bother checking in with the Council, but they have surprisingly made public comment today due to the changeover in presidencies to the Lithuanian delegation. Knowing the guys in Vilnius are big fans of the whole Solvency II shooting match (?), it was interesting to see they only have "...continued negotiations on the Omnibus II insurance dossier" scheduled over the next 6 months, as opposed to something more positive. We'll certainly be seeing Santa before the Parliamentary Plenary vote then, big question is will we also see the 2014 Easter Bunny?
There's a couple of unanswered questions loitering around in the Solvency II space which I'm sure a more plugged-in switched-on kind of girl could answer, but which I'm struggling to pin down. Looking forward to hearing from anyone on the following;
"Quick Fix 2" - as far as the paperwork from the first "quick fix" is concerned, the Solvency II 'clock' starts ticking on 30th June 2013, and despite the brave attempts of a cabal of Parliamentarians to obtain a second "quick fix", it seems like they failed. Is the clock really ticking for transposition into national law as of Monday?
Omnibus II - putting quick fixes to one side, the anticipation of EIOPA's LTGA report feeding into a positive EU Parliamentary Plenary vote in October 2013 was one of the anchors of what one might call a timely implementation calendar (i.e. 2016). In a typically unannounced manner, the indicative Plenary date, which had already been kicked down the road at least seven times, has this week been inauspiciously removed from the Procedure File entirely (confirmed here on the 'History' tab on 20/06/13).
With EU Parliamentary elections scheduled for May 2014, and Parliament begging for the Solvency II inertia to be broken beforehand, do we reasonably have another window to get Omnibus II through a Plenary vote before that political upheaval, or is the removal of an indicative date acceptance that the LTGA has generated more problems than it has solved?
(Level 2) Implementing measures - the European Commission had these timetabled in their 2013 "expected adoption dates" list, chalked down specifically for Q4 2013. In the last two months this has been removed from the list in its entirety (well spotted Norton Rose). Is this direct acknowledgement that, as indicated by Burkhard Balz last week, that there is no chance of Omnibus II clearing the Plenary hurdle this year?
