Skip to content. | Skip to navigation

Personal tools
You are here: Home topics Finance CEA presses for further work on Solvency II implementing measures

CEA presses for further work on Solvency II implementing measures

05 May 2010
by CEA -- last modified 05 May 2010

The CEA, the European insurance and reinsurance federation, today reiterated its support for the EU’s new Solvency II regulatory regime but called for more work to be done on the Level 2 measures that will put the flesh on the bones of the Framework Directive. It also called for changes to the draft specifications for the fifth Quantitative Impact Study (QIS 5) that will be carried out later this year to test the likely effects of Solvency II on the insurance industry.


Speaking in Brussels today at the European Commission's public hearing on the Level 2 implementing measures, the CEA's director general, Michaela Koller, said: "Although we welcome the modifications that the European Commission has already made to the implementing measures and the QIS 5 specifications, the proposed measures are still too conservative in many areas and much work remains to be done before they truly reflect the economic, risk-based principles that form the basis of the Framework Directive."

"The fifth impact study is a vital element in the development of the new regulatory regime," said Koller. "To achieve the level of industry participation in the exercise that the EC is seeking, and to ensure that it is an effective test of whether Solvency II is fit for purpose, it is vital that the specifications include appropriate solutions to outstanding issues."

The CEA had serious concerns about the advice supplied to the Commission by the Committee of European Insurance and Occupational Pensions Supervisors (Ceiops) on the Solvency II implementing measures. It therefore welcomes the positive modifications made by the Commission, particularly in areas such as: the treatment of expected future profits; wider application of the liquidity premium; and the allowance for diversification between lines of business in the calculation of the risk margin.

Nevertheless, Europe's insurers still believe that the proposed measures are too conservative in many areas, such as those affecting the calibration of the health and non-life underwriting risks, investment in corporate bonds and insurers' participation in banks.

The CEA believes that further work also needs to be done on other aspects of the draft measures, namely on the appropriate allocation of the liquidity premium and on the concept of the fungibility of own funds in the group solvency calculation.

At the hearing, Koller warned of the dangers of imposing overly conservative capital requirements on the insurance industry through the implementing measures. "Excessive capital requirements would have unnecessary and harmful consequences for the insurance industry, for the economy and for society," she said.

"The economic crisis cannot be used as justification for imposing excessive capital requirements on an industry that not only did not cause the crisis but also that withstood it well," said Koller. She put this in the context of what the European insurance industry considers a worrying trend to regulate all financial services sectors in the same manner, failing to recognise the differences between the business models of the different sectors.


The European Commission launched its proposal for a fundamental and wider 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) has supplied 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. The EC's restricted consultation on the QIS 5 specifications runs until 20 May and today's public hearing forms part of that process. The EC is due to publish the final QIS 5 technical specifications on 1 July. The QIS 5 exercise itself will run between August and November 2010 and the EC is due to present its proposals for the implementing measures in autumn 2010. The Directive is due to be transposed into national legislation by 31 October 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 94% of total European premium income. Insurance makes a major contribution to Europe’s economic growth and development. European insurers generate premium income of €1 100bn, employ one million people and invest €6 900bn in the economy.

CEA - the European insurance and reinsurance federation