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Solvency II Directive

Answer

The European Commission has announced that it will publish the Solvency II directive in July 2007. The legislative proposal will then need to be adopted by the Council of Ministers and the European Parliament. The date of implementation of the directive will be subject to their agreement. It is not expected that implementation will be earlier than 2010 or 2011.The amount of time required to reach agreement on the directive is uncertain and will depend on a range of factors. The UK Government is supportive of the Solvency II project and will therefore work with other EU member states to achieve agreement to the directive without undue delay. HM Treasury participates in regular meetings of the European Commission's Working Group on Insurance Solvency and meetings of the European Insurance and Occupational Pensions Committee (EIOPC).The Solvency II directive has not yet been adopted by the Council of Ministers and the European Parliament and therefore its effects on the limits and restrictions on the type of assets which may be held to cover capital requirements by insurance companies remain uncertain. The Government's views on this issue have been outlined in a joint discussion paper by HM Treasury and the Financial Services Authority: "Solvency II: a new framework for prudential regulation of insurance in the EU".HM Treasury and the Financial Services Authority are working together closely on the Solvency II project. HM Treasury and the FSA have jointly produced two discussion papers on Solvency II: "Solvency II: a new framework for prudential regulation of insurance in the EU" and "Supervising insurance groups under Solvency II":"http://www.hm-treasury.gov.uk./media/B13/CO/solvencyII_discussionpaper.pdf""http://www.hm-treasury.gov.uk./media/BD8/46/solvencyii061006.pdf"HM Treasury has received representations from insurance companies, the Association of British Insurers and the Association of Mutual Insurers in respect of the discussion papers. HM Treasury is in regular dialogue with stakeholders on Solvency II issues.The Solvency II directive has not yet been adopted by the Council of Ministers and the European Parliament. At this stage it is not possible to determine accurately the costs and benefits of the directive. The Government's view is that the directive can generate significant economic benefits by deepening the EU Single Market in insurance services. The directive has support in principle from industry stakeholders including the Association of British Insurers (ABI).The European Commission is required to publish an impact assessment of the Solvency II directive. HM Treasury will publish a partial Regulatory Impact Assessment in summer 2007 in order to assess the costs and benefits to the UK insurance industry and UK consumers.

Secondary information

Type

Written question

Reference

102793; 453 c600-1W

Session

2006-07

Subjects

EU law Insurance

Link

View this Written question on www.publications.parliament.uk