EAPD’s own Ambereen Salamat and Chris Collins were asked by Complinet in its Mid-Year Roundup what the biggest regulatory and compliance challenge this year will be and above all, Solvency II was the resounding response. Full text of the response is below and the article first appeared on Complinet on July 01, 2010.
Solvency II is inevitably proving to be a challenge to all sectors of the insurance industry. In particular, the impact of the new regime on group supervision rules is yet to be fully clarified so is giving rise to significant challenges. This issue is important as many of the regulations that apply under Solvency II to individual entities also apply to their groups, with the necessary adjustments. The key issue is to determine the level at which group supervision is applied. This is usually at the level of the ultimate parent undertaking of an insurance group, however, Solvency II also introduces the possibility of alternative supervision at sub-group level. For groups headquartered in the EEA, the new rules are relatively clear, so insurance groups to which they apply are able to consider the impact and plan accordingly.
However, where a group is headquartered outside the EEA, the extent of the group supervision which will apply will depend on whether group supervision in the jurisdiction in which the group is headquartered is assessed as equivalent to Solvency II. If the local group supervision is equivalent, that regime will apply. If it is not, various options are available to member states but a non-EEA-owned group may potentially be required to comply with EU rules. Until the first round of equivalency assessments has been completed and further detail provided on how the group supervisor will coordinate with the insurance group and its college of supervisors, it will be difficult for non-EEA owned insurance groups to plan to meet the challenges posed by the Solvency II group supervision rules.
