Is Solvency II up and running?
The European Solvency II legal framework is completed after nearly fifteen years of preparation. Not many people are aware that the foundation for Solvency II was laid in 2000 and that the directive refers 14 existing insurance directives to the wastepaper basket.
Solvency II applies as of 1 January 2016, at least in those Member States which have done their homework. Member States had to convert the framework directives – Solvency II (2009) and the Omnibus II (2014) – into national law not later than 31 March 2015. This is necessary, e.g. to allow (re)insurance undertakings and supervisors to make the necessary preparations.
The majority of Member States transposed the directives into national law, but according to the Commission, many did so too late. Whereas 86% or 24 Member States transposed the Solvency II Directive, the Commission says it has launched infringement proceedings against 21 Member States. Concerning the Omnibus II Directive, 75% or 21 Member States made the conversion. The Commission initiated infringement proceedings against 23 Member States . So far, the Commission has not closed any infringement procedure with respect to any Member State which was too late.
What does this mean for the laggards? In Member States which have not yet transposed the directives, Solvency I continues to apply as is the case in the Czech Republic. According to well-informed sources this situation may even continue till end 2016. Another “solution” is to continue to apply the EIOPA guidelines for the preparatory phase, but without sanction opportunity. As the preparatory phase terminated on the 31 December 2015, these EIOPA guidelines are therefore no longer relevant. To allow for a continued application, some national legal plumbing is necessary. In any case, this delay means that no internal models or undertaking specific parameters can be approved in those lagging Member States. Especially for groups this creates difficulties.
by Lieve Lowet, author of European Solvency II law
(Knopspublishing, 2012, 2014, 2016 forthcoming)