10 September 2009
Published in: Regulation - supervision
CEIOPS “has overreacted to the financial crisis”
The European Commission is unlikely to adopt the level 2 implementing measures in their current form, according to PwC. The Commission is said to be sceptical about the advice issued by the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) in its consultation papers issued this summer, which may make it sympathetic to lobbying efforts.
With Friday 11 September the closing date for industry comments on the consultation papers, Jim Bichard, partner at PwC, said the overwhelming response has been that "CEIOPS has overreacted to the financial crisis by adopting a disproportionate level of regulatory restriction and over-prudence."
"Capital resource requirements are expected to increase substantially for many insurers," Bichard said, "particularly where an internal model is not developed, and the use of capital resources (‘own funds') to meet the capital requirement will become much more restricted." Added to which, the market feels that costs of implementing Solvency II are soaring. "CEIOPS' advice demands significant changes to governance, systems and controls...and requires a substantially increased level of reporting and documentation."
Bichard warned that insurers disappointed with the removal of the group support mechanism (see IERM, News/comment, 27 January 2009, "Europe races against time to resolve group support issue") will have been hoping for "a sensitive and risk-focused approach to implementing measures." Instead, "The level of detail that CEIOPS is proposing to define at level 2 will give national supervisors less flexibility in how they implement the Solvency II directive so may reduce the potential for arbitrage between territories." (See also IERM, Regulation/supervision, 9 September, "How level will the Solvency II playing field be?")