Fifth quantitative impact study is crucial element in finalisation of Solvency II

23 August 2010
by CEA -- last modified 25 August 2010

The CEA, the European insurance and reinsurance federation, has today called on all European insurers, both large and small, to take part in the European Commission’s fifth quantitative impact study (QIS 5). Broad participation will ensure that a clear picture is reached of the appropriateness and feasibility of the tentative solutions and options identified by the Commission and will thus pave the way for the finalisation of Solvency II, the EU’s new regulatory regime.

"The insurance industry has always supported the Solvency II project, which introduces a robust, economic risk-based prudential regime for insurance. QIS 5 is a unique opportunity for insurers to contribute to the finalisation of Solvency II, since its results will provide crucial information for Solvency II's ultimate design and calibration, even though some elements may require further adjustments" said Tommy Persson, CEA president.

The CEA had previously voiced serious concerns over the advice for the implementing measures drawn up by the Committee of European Insurance and Occupational Pensions Supervisors (Ceiops), which it felt was excessively prudent in relation to capital requirements and did not always respect the basic principles of an economic risk-based regulatory regime, as set out in the Solvency II Framework Directive.

"The CEA made contributions in order to create implementing measures that are more in line with economic reality and better reflect the Level 1 Directive text," said Persson. "Although many of the issues raised by the CEA have been addressed in the QIS 5 specifications, there remain areas of significant concern."

"We believe that the QIS 5 specifications prepared by the European Commission represent a step in the right direction compared to the Ceiops advice. At the same time we urge the European Commission and the other EU institutions to consider the outstanding industry concerns in order to draw up a balanced regime that ensures consumer protection, promotes financial stability and, at the same time, provides the insurance industry with the necessary conditions to continue to effectively play its role in the economy," added Persson. 

The QIS 5 exercise will run between August and mid-November 2010, with the results due in April 2011. The CEA is running workshops in a number of EU countries to facilitate companies' participation in the exercise. The first workshop was held in Brussels on 4 August. Further workshops will take place in Vienna on 21 September, Warsaw on 5 October, Tallinn on 7 October and Athens on 12 October.

Background

The European Commission launched its proposal for a fundamental and wide ranging review of solvency requirements — Solvency II — in July 2007. The text of the Solvency II Framework Directive was agreed after prolonged negotiation between the European Parliament, Council and Commission in spring 2009.

The Committee of European Insurance and Occupational Pensions Supervisors (Ceiops) prepared advice to the Commission on the Level 2 implementing measures that provide the technical detail of the Framework Directive. The EC is now drafting its proposals for the implementing measures.

Four quantitative impact studies (QIS) have been run by Ceiops in preparation for the implementing measures. QIS 5 comes at the final stage in their preparation. The EC is due to present its proposals for the implementing measures in spring 2011. The Directive is due to be transposed into national legislation by 31 December 2012.

The CEA is the European insurance and reinsurance federation. Through its 33 member bodies — the national insurance associations — the CEA represents all types of insurance and reinsurance undertakings, eg pan-European companies, monoliners, mutuals and SMEs. The CEA, which is based in Brussels, represents undertakings that account for around 95% of total European premium income. Insurance makes a major contribution to Europe’s economic growth and development. European insurers generate premium income of over €1,050bn, employ one million people and invest more than €6 800bn in the economy.

CEA, the European insurance and reinsurance federation