The headline messages to come out of yesterday's meeting of the All Party Parliamentary Group on Insurance & Financial Services are that there is still no certainty over the implementation timetable and that some of the crucial issues about equivalency in the treatment of assets remain unresolved.
Peter Skinner, the Labour MEP most closely involved in the debates on Solvency 2 in the European Parliament, offered a frank and clear summary of where the challenges to implementation lie and the possible solutions.
On the timetable, it was clear that many of the industry observers at the meeting just wanted certainty, even if the meant looking into the middle distance at 2017. One of their biggest fears is that a sudden rush to implementation might leave them operating under two regimes, increasing the already considerable costs of compliance with the new regime. Mr Skinner was able to offer some reassurance on the dangers of two reporting regimes overlapping, promising that the European Parliament and the Commission were both aware of the need to avoid this.
He did inject an element of political reality into the debate about the timetable by pointing out that both the Commission and the Parliament are due to run until 2015 and will be keen to resolve this issue before their respective mandates run out. This would be advantageous to the insurance industry too as it will hardly relish the challenge of restarting a highly technical debate with new MEPs and Commissioners.
The need to sort out the equivalence issues around assets, especially the less liquid assets, was acknowledged by Mr Skinner, who accepted some of the broader political and economic consequences of not getting this sorted out, such as the failure to get the insurance industry to invest in infrastructure bonds. It was also pointed out that the lack of clarity was inhibiting product innovation in the UK in key policy areas such as long term care. The lack of agreement of the status of housing assets has made insurers very wary of meeting the challenges set out in the Dilnot report.
A lot clearly depends on the outcome of the various technical assessments that are promised by the end of April and whether these satisfy the crucial French and German concerns, said Mr Skinner.
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