Commissioner Barnier responds to Solvency II critics[caption id="attachment_1513" align="alignleft" width="159"] Michel Barnier, EU internal market commissioner © Ma Gali[/caption] “Criticisms levied against Solvency II, particularly that calibrations are too high, have not been confirmed by evidence,” according to Michel Barnier, EU internal market commissioner. The FT reports that Mr Barnier made the statement in his response (seen by the FT) to the letter sent by four leading industry trade associations in April this year. The letter criticises the Solvency II regulation for increasing pro-cyclicality and driving insurers out of long-term debt to the detriment of policy holders. Mr Barnier did however acknowledge some of the complaints levelled at the regulation and noted that the commission staff have proposed “a long list of suggestions” to simplify the regime, according to the FT.
Q&A from the FSA conferenceThe FSA published a Q&A document following up on the Solvency II conference held in April this year. Responses are grouped under five sections; listed here with some highlights.
- Standard formula, reviews and approvals
- The FSA aims to be open for all applications from 30 March 2012.
- Internal model approval process
- Pre-application is closed; 77 firms have been accepted into pre-application, but the FSA could not say how many will be approved for day one of the Solvency II regime (1 January 2013).
- If a firm is not in pre-application, it should assume that it will not get a decision for day one.
- The FSA stresses that a firm’s application to use an internal model could fail to satisfy the tests and standards set out in the Solvency II Directive. It encourages firms to prepare contingency arrangements should this occur.
- 30 March 2012 to 31 May 2012 will be the application submission window for internal model day one approval.
- Quantitative techniques and tools
- In July 2011 the FSA will release more details on the set of tools for developing an internal model. The tools will help firms earmarked for reduced level of attention.
- External review
- Assuming a decision is made to continue with this particular tool, the FSA will roll out the process for the use of external reviews of data management to all firms in pre-application from July 2011 onwards.
- Policy and implementation timelines
- In January 2012 the European Parliament is expected to vote to finalise the Omnibus II proposals to amend the Solvency II Directive. On this basis, the FSA expects the Commission proposal for the delegated acts to be issued in the first half 2012, along with EIOPA consultation on implementing technical standards.