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Brussels, 11 March 2014
Omnibus II vote: A big step towards a safer and more competitive insurance industry
The European Parliament today adopted in plenary session the "Omnibus II" Directive that completes the "Solvency II" Directive and finalises the new framework for insurance regulation and supervision in the EU.
On this occasion, European Commissioner for Internal Market and Services Michel Barnier said:
"The European Parliament has just taken a very important step towards the introduction of a modern and risk-based solvency regime for the insurance industry in Europe as of 1 January 2016, making it both safer and more competitive. This long-awaited and vital reform will finally become a reality.
I would like to warmly congratulate everyone who has contributed to reaching agreement on this highly complex file, in particular the European Parliament - Rapporteur Burkhard Balz and Sharon Bowles, Chair of the ECON Committee - as well as the Lithuanian Presidency which steered this file to an agreement in trilogue in November 2013.
The Commission is now preparing the next stage of implementation of Solvency II, which will be the adoption of a Commission Delegated Act containing a large number of detailed implementing rules planned for the summer of this year. EIOPA is also working on a package of Implementing Technical Standards that will ensure that everything will be ready for the application of Solvency II on 1 January 2016."
The so-called Omnibus II Directive will complement the Solvency II Directive, creating a modern risk-based regulatory and supervisory framework for the insurance sector (Directive 2009/138/EC). The draft Directive is called Omnibus II because an earlier Directive, known as "Omnibus I" enacted technical amendments to 11 Directives incorporating into banking and securities directives references to the European Supervisory Authorities (the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA)), thus operationalizing their powers as granted in their founding directives. Omnibus II does the same for the insurance sector, operationalizing the powers of the European Insurance and Occupational Pensions Authority (EIOPA) via changes to the Solvency II Directive. However, it was decided in the course of the legislative process to also include in Omnibus II elements changing some substantive aspects of the Solvency II regime.
Those amendments did not cover the "Solvency II" Directive for the insurance sector (Directive 2009/138/EC), for which the competent European Supervisory Authority is EIOPA nor the Prospectus Directive (Directive 2003/71/EC), for which the competent supervisory authority is ESMA.
The draft Omnibus II Directive (IP/11/49) therefore contained a set of amendments to the Solvency II Directive and to the Prospectus Directive. These amendments include the provision of specific tasks for EIOPA and for ESMA. In particular, it clarifies the role of EIOPA in ensuring harmonised technical approaches for the calculation of technical provisions and capital requirements. In addition it:
Furthermore, the Omnibus II Directive contains a package of measures to provide clarity on the treatment of insurance products with long-term guarantees in order to mitigate the effects of artificial volatility. These measures include: a matching adjustment, a volatility adjustment, extrapolation of the risk-free interest rate, two specific transitional measures, and extension of the recovery period. In this way the Directive ensures that the insurance industry can continue offering long term guaranteed products. The Omnibus II Directive also contains transitional measures in certain areas including on transitional third-country equivalence if deemed necessary to avoid market disruption and to allow a smooth transition to the new regime under Solvency II.
The European Parliament and the Council agreed that the Solvency II Directive (including the amendments introduced by Omnibus II) should apply as of 1 January 2016, in line with the Commission proposal of 2 October 2013 postponing the application date of Solvency II (MEMO/13/841). After today’s adoption by the European Parliament, the directive will need to be formally adopted by the Council and be published in the Official Journal. It will enter into force the day after publication.