Published by Kim Durniat on
Amit Lad contributed to the writing of this blog
A draft of the Omnibus II directive was first published on 19 January 2011. Frustrating for many stakeholders across Europe, this is the fifth time that the Omnibus II vote has been delayed since it was first scheduled over two years ago.
The Omnibus II directive is an amendment of the 2009 Solvency II directive. When it was originally written, its main aim was to bring the Solvency II directive in line with the Lisbon Treaty , and to take into account EIOPA and the EU’s new supervisory structure.
Omnibus II gave politicians a chance to look the details of the Solvency II directive after the 2008 credit crunch occurred. In this light the Solvency II directive did not look as good as it did pre-2008 and so the politicians have been trying to use Omnibus II as a tool to make more technical changes to the original Solvency II directive.
In its current state, Omnibus II contains some changes to controversial parts of the Solvency II directive (such as long-term guarantees and reporting) as well as transitional measures and the date that Solvency II will actually come into force.
The European Commission, the European Parliament and the Council of the EU all need to agree on the Omnibus II directive before it can be adopted as legislation.
In the past there have been delays due to disagreements over the provisions in the long-term guarantee package. This led to EIOPA conducting an impact assessment across the European insurance industry in early 2013, resulting in a report released on 14 June 2013.
It is obvious that the delay is due to not being able to reach an agreement, but the exact points of contention have not been made apparent. The Omnibus II directive contains some very important technical issues that will massively impact many insurers and these delays show just how difficult it is to reach a consensus.
We see three possible things happening when it comes to the rescheduled vote on 11 March 2014:
At the Association of British Insurer’s (ABI’s) biennial conference in July this year, Gabriel Bernardino, CEO of EIOPA, noted that we needed political agreement on the Omnibus II directive this year in order for the 1 January 2016 Solvency II implementation date to be met. It now looks as though, whatever the outcome of the plenary vote, we should be pushing our implementation horizon back to at least 2017!
EIOPA have not made an announcement on what they want national regulators and insurers to do with respect to the interim measures that are due to come into force on 1 January 2014. This delay is likely to have some sort of impact as the interim guidelines were written on the assumption that the Omnibus II directive would be agreed by 1 January 2014 and that the Solvency II directive will be applicable from 1 January 2016. For example, as part of the interim reporting guidelines, Insurers are expected to develop processes to report Pillar I information, but they cannot be expected to do this until they know exactly what Pillar I is, which will not happen until March at the earliest!
We will continue to monitor updates and keep you informed of what is going on…
i The European announcement for this can be found here: http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?id=589513
ii More information about the Lisbon Treaty can be found here: http://europa.eu/lisbon_treaty/glance/index_en.htm
iii Our blog on this report can be found here: http://www.barnett-waddingham.co.uk/blog/insurance/2013/06/eiopas-technical-findings-on-the-long-term-guarantee-assessment/