WIREDGOV

EU Council, represented by the Lithuanian Presidency, and the European Parliament have on November 13 in Brussels achieved a provisional political agreement on Omnibus II directive.

Agreement on Omnibus II enables Solvency II framework finally to become operational. Solvency II is a long-expected major overhaul of the EU insurance regulatory framework and is very important for the insurance industry, supervisors and policyholders in the EU.

“This is a very important legislative dossier aiming at financial stability in the insurance sector and beyond. The agreement comes in time for the revised directive to enter into force. The agreement should create a momentum for the final adoption by the EU Council and the European Parliament,” said ambassador Raimundas Karoblis, chair of the Permanent Representatives Committee.

Agreed new rules contain so-called “long term guarantees” (LTG) measures which adjust current Solvency II framework to cope with “artificial” volatility and low interest rate environment, and allow for the smooth transition from the Solvency I regime to the Solvency II.

In addition, Omnibus II directive contains enhanced requirements for risk management, supervisory review process, public disclosure and possibility to review LTG, in order to ensure prudence and transparency of the framework.

The provisional agreement reached with the European Parliament will have to be endorsed by EU Member States before being finalised. Then the Solvency II will become operational from January 1, 2016.
 
Background information:

Omnibus II directive was proposed in order to take into account the new supervisory architecture for insurance, namely the setting up of the European Insurance and Occupational Pensions Agency (EIOPA) and the entry into force of the Lisbon Treaty which required the adjustment of the Commission powers to adopt implementing measures to empowerments for the Commission to adopt implementing and delegated acts according to Article 290 of the Treaty on the Functioning of the European Union.

In the course of negotiations, the need emerged to introduce measures on the treatment of insurance products with long-term guarantees under the new Solvency II insurance regulatory regime (LTG package). Discussions revolved around it for the past two years.