"The compromises reached by MEPs across parties, on the basis of an excellent text prepared by the European Commission, will create a sophisticated, economic risk-based approach to the supervision and capital assessment of insurers. Solvency II rapporteur Peter Skinner and shadow rapporteurs Karsten Friedrich Hoppenstedt and Sharon Bowles are to be congratulated," added Koller.
Alberto Corinti, the CEA's deputy director general, said: "We welcome the decision by MEPs to place no arbitrary limits on the functioning of the group support regime, which allows the financial strength of a parent company to underpin the operations of its subsidiaries and which is vital if the supervisory structure is to reflect the economic reality of insurance groups."
The CEA likewise welcomed the Committee's decision not to support an amendment allowing solo supervisors to impose capital add-ons to the solvency capital requirement (SCR) of a subsidiary under the group support regime. Such a move would have seriously compromised the sound functioning of the regime.
The CEA broadly supported the vote in favour of the so-called "combined approach" to the calculation of the minimum capital requirement (MCR) for insurers, under which the result of the calculation must fall within a corridor of 25-45% of the SCR. In the absence of a direct link between the MCR and the value of the SCR, this methodology will at least create a minimum level of sensitivity in the calculation.
Over 800 amendments had been proposed to the draft text of the new framework for insurance supervision and regulation put forward by Peter Skinner, MEP, raising fears that the vote might be delayed to allow further time for their consideration.
"We are pleased that this vote keeps the timetable for the Directive on track, as delays in implementing this enhanced approach to the calculation and regulation of insurers' solvency requirements would send the wrong message both to European consumers and to the international community, particularly during the current market turmoil," said Koller.
Under the EU's co-decision rules, the European Parliament has a joint say with EU states on the Directive. Following the committee vote, the European Parliament plenary is expected to vote on the proposed Directive at the end of November.
The Council of Economic and Finance Ministers had a first orientation debate on the Solvency II Framework Directive today at its meeting in Luxembourg. The CEA believes that in the areas mentioned above the Parliamentary committee's vote today is a very good basis for the next discussions in the Council in November.
Background
Solvency capital requirements for EU insurers have been in place since the 1970s. Following a review required by the third generation Insurance Directives of the 1990s, limited reforms, known as Solvency I, were agreed by the European Parliament and the Council in 2002. The European Commission adopted the Solvency II proposal for a more fundamental and wider ranging review in July 2007 and an amended proposal on 26 February 2008.
