"This is crisis prevention, pure and simple. The future Solvency II regulatory regime must be able to identify the consolidated exposures of insurance groups and, in this context, supervisors should be able to act in cooperation. If Europe's insurers are to be encouraged to develop internationally, European regulatory and supervisory approaches cannot lag behind," insisted Koller.
The CEA has long argued that appropriate group supervision ultimately increases policyholder protection and at the same time facilitates the optimum allocation of capital.
"The Solvency II proposal, including the group support regime, offers a unique opportunity for aligning supervision to risk and capital management, based on a clear framework for supervisory cooperation and coordination. In shaping the regulatory structure of the future for Europe's insurers, European law-makers must not lose sight of the economic realities of the markets they regulate," Koller added.
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.
The current Solvency II timetable envisages that the Directive will be adopted by the European Parliament and the Council in 2009 and transposed into law in Member States by 2012.
The group support regime, in the context of group supervision, is one of the outstanding issues of the draft Solvency II Framework Directive, in particular with regard to the balance of power between the supervisor in a group's home state and the supervisors of group subsidiaries in other countries.
