Solvency II – the Phoney War
The Guidelines on Governance released by EIOPA on 27 September 2013 set out EIOPA's view on what insurers should be doing in advance of (and in preparation for) the implementation of Solvency II.
It is fortunate that the PRA has saved us the task of reviewing this mighty 411 page tome by promptly producing its own paper (CP9/13) on 21 October 2013.
The PRA does identify a few areas where the guidelines are more "granular" than its own current rules. So for example, the guidelines that deal with "own fund" requirements provide that a firm must ensure that the terms and conditions of any own fund item are "clear and unambiguous" in relation to the criteria of the applicable capital regime. This goes beyond the requirements of GENPRU 1.2 and may create a little difficulty in the case of more exotic instruments. But ultimately the PRA concludes - in just 13 pages - that the impact of the guidelines is relatively limited. Given that the window for comments is just three weeks (ending on 15 November), I don't think the PRA is expecting anyone to disagree...
Is this evidence that the stars in the Solvency II firmament are coming into alignment? Or is it simply a reflection of the fact that no further substantive detail on the level 2, 3 or other measures surrounding the final shape of Solvency II was then (or is now) available? I fear it is the latter. The phony war continues, and if Solvency II is to come into force on 1 January 2016, there is an awful lot more detail to be had.