Solvency II passed without group support

Industry associations respond to the passing of the EU's new insurance directive

BRUSSELS - The European Parliament has agreed to pass the Solvency II directive without the group support regime. Group support, which was successfully opposed by the European Council of Ministers, was designed to address home-host capital allocation and cross-border supervision of Europe's systemically important cross-border insurance groups.

The Parliament approved the equity duration dampener demanded by the Council, along with almost all of the Council's other demands. It agreed to discuss group support and the equity dampener again in 2015, in response to fears the dampener will increase national protectionism.

There has been intense political pressure to formalise a Solvency II framework before the cessation of parliament and the European election season this summer. The compromise reached has received a mixed response from insurance industry bodies. The Association of British Insurers (ABI) said the legislation would produce better risk-based supervision in Europe but decried the failure of group support.

"We are very disappointed that an opportunity has been missed to enhance the regulation of groups that operate across borders," says Stephen Haddrill, director-general at ABI based in London. "Capital requirements will still be set in each country a firm operates in, and not set centrally by their lead supervisor. The crisis has shown that the lead supervisor for a firm needs to look across boundaries and ensure risks across the group are properly managed and capitalised as a whole."

The European Insurance Federation (CEA) also registered its disappointment at the group support carve-out - noting the importance of effective group support in the systemic risk supervision proposals released in February's Larosière report - but reflected general relief that the directive had passed in some form rather than not at all.

"This is a decisive step towards the new, enhanced regulatory regime that we have been seeking for Europe's insurers," says Michaela Koller, director-general at CEA in Brussels. "We are happy that the timetable for implementing the directive is on track. Solvency II is an important and timely piece of legislation and any delay would have been most unfortunate in the current economic climate."

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here