On October 3, the UK’s Financial Services Authority (FSA) announced a revision to the dates on which it plans to implement the provisions of the European Union’s Solvency II regulations governing the insurance industry, moving the date for companies back by a year.
The FSA said: “We revise our implementation assumptions in light of the discussions about bifurcation in Europe. 1 January 2013 remains the date at which the responsibilities of supervisors and EIOPA would be switched on (i.e. transposition of the Directive would have to be complete by 1 January 2013), and 1 January 2014 is when the Solvency II requirements would be switched on for firms. We will contact firms individually in the coming weeks to discuss what this means for their implementation plans.”
Both Lloyd’s and Aon Benfield issued statements on the decision.
Lloyd’s General Counsel Sean McGovern stated: “We are glad to see the FSA is committed to pressing ahead and maintaining the momentum on Solvency II implementation. However, we urgently need clarity on how firms will be treated in 2013 if we are to avoid significant unnecessary and duplicative expense.
“Lloyd’s is focused on completing our preparations for internal model approval in the most timely and cost effective way possible and we hope the FSA will be pragmatic and allow us to move from the current ICAS system to Solvency II ahead of the 2014 date.”
Gareth Haslip, head of the Risk & Capital Strategy – EMEA at Aon Benfield Analytics, commented: “There is undoubtedly an element of surprise to today’s announcement from the FSA of the revised Solvency II dates for the UK.
“For those companies that have invested significantly in preparing for the original 2013 start date, we believe the next step is to capitalize on their position of achieving regulatory compliance ahead of schedule. By leveraging the investment in risk management, we are seeing companies rethinking their business strategy to achieve positive results under the future Solvency II capital framework – across both insurance and investment.
“On the other hand, smaller UK companies will breathe a sigh of relief with the deadline extension, giving them more time to manage this challenging framework. Each insurer requires an individual approach and we continue to work with clients to help them maximize the return on their Solvency II investment.
“Our involvement focuses primarily on areas such as catastrophe risk, model validation projects, investment optimization solutions, benchmarking of premium and reserve risk parameters and structuring solutions for those companies with pressure on capital due to economic uncertainty.”
Sources: FSA, Lloyd’s, Aon Benfield
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