Solvency II, the proposed regulatory
regime for European Union (EU) insurers, took a decisive step
forward in late-March with the approval of the text of the proposed
Solvency II Framework Directive by the Committee of Permanent
Representatives (CPR). The CPR consists of the member states’
ambassadors to the EU and is responsible for preparing the work of
the EU Council, the EU’s highest political body.

Welcoming the development Michaela Koller,
director general of the European federation of insurers and
reinsurers, the Comité Européen des Assurances (CEA) said in a
statement: “We are happy that the timetable for implementing the
Directive is on track. Solvency II is an important and timely piece
of legislation and any delay would have been most unfortunate in
the current economic climate.”

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However, the CEA expressed its disappointment
at the omission from the framework directive of the group support
regime which would allow for supervision of insurers in line with
what the CEA terms “their economic reality.” In essence, for many
insurers that reality is that they form part of a larger,
multi-national group.

In a statement the CEA stressed that in
omitting group support from the text the EU is missing the
opportunity to introduce a tool that would have met the need for
the efficient and effective supervision of multinational
groups.

The CEA noted that the need for group support
was highlighted in a report on regulatory supervision in the EU by
the De Larosière Group published in February.

Headed by a former International Monetary Fund
MD Jacques de Larosiere, the group was tasked by the European
Commission to review the EU’s banking and insurance regulatory
system in the wake of the global financial crisis.

Omission of group support also drew harsh
criticism from the Association of British Insurers (ABI).

“As the De Larosiere report outlined, we need
supervision that reflects the cross border nature of businesses,”
said Stephen Haddrill the ABI’s director general.

“A directive with group support would have
been world-leading. This directive is not.”

The European Parliament will vote on the
directive on 22 April with implementation of Solvency II
anticipated in October 2012.