Solvency II takes shape: Emerging blueprint for implementation

A clearer picture is beginning to emerge of how the principles of the new directive are likely to be put into practice particularly with the recent adoption of the Solvency II Directive, the launch of significant new supervisory guidance and the overhaul of risk management regulations in Germany. Mark Batten and Julia Schüller of PricewaterhouseCoopers discuss what regulators are likely to expect and the resulting implications for insurers

Politics, as Bismarck said, is the “art of the attainable”. The European Parliament’s plenary session has adopted the Commission’s proposal for the primary legislation (“framework directive”) for Solvency II on April 22, 2009, following the agreement reached between the Parliament, the Council and the Commission in late March 2009. ECOFIN will have to ratify the framework directive in May, while enforcement of Solvency II and transposition into national legislations are supposed to take place by the end of October 2012. This adoption required a compromise in which group support, the main point of contention, has been dropped from the directive, though its possible re-inclusion will be re-considered in 2015.