Solvency II directive passes in landslide

After more than a year of controversy, the European Parliament voted the Solvency II insurance regulation directive into law by an overwhelming margin, with only fringe groups not in favour. Peter Skinner, MEP for South-east England and rapporteur of the directive, described the majority as "massive", and said it was a "ringing endorsement of the package" presented to the European Parliament.

The directive includes the controversial counter-cyclical 'dampener' equity charge, the introduction of which, under the French presidency in the second half of 2008, was opposed by parliament. This ultimately led to the omission of the group support measures favoured by many large industry lobbies, such as the UK's Association of British Insurers.

Skinner maintained that the dampener would not be used as a protectionist measure. "It will be watched very closely. The eligible assets are ring-fenced and locked in. We will hear any complaints and be working with the commission to address any negative cross-border effects."

The directive now moves to the so-called 'level two' stage, where the implementation of the directive's measures will be discussed, ahead of becoming active in 2012. Skinner said the principle issue will be the co-operation of different member states' supervisors under the group supervision measures. "Regulators will be forced to work together on groups, using standardised rules. Hopefully this will lead to the mutual suspicion starting to ease, and we will be able to bring in the group support measures in 2015."

Skinner sees convergence with the proposed federal regulator in the US as an ultimate goal. "It's not that far off. They don't like being behind the EU. We need regulation to work together rather than argue and compete."