FSA publishes path to Solvency II

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LONDON – The Financial Services Authority (FSA) has published a discussion paper outlining the UK path to Solvency II. The regulator’s paper, entitled ‘Insurance Risk Management: The Path to Solvency II’, is a risk management roadmap to aid UK insurers’ compliance with the European Union directive, scheduled for legislation in October 2012.

The paper outlines a number of functions that insurance firms will need to perform for the implementation of the directive’s requirements. The first part focuses on quantitative and technical aspects of the capital requirements, such as capital add-ons, outsourcing and supervisory reporting. The later chapters focus on more qualitative aspects such as tests and standards expected from firms, and changes to UK supervisory practice once the directive has been implemented.

Agreement on the Level 1 framework of Solvency II is expected late this year or by early 2009. It will then fall to the EU Committee of European Insurance and Occupational Pensions Providers to work with the European Commission, providing technical advice and consultation. This process will, according to the timetable, be completed by late 2010 – allowing for the ironing out of the directive’s Level 2 detail for its 2012 roll-out.

The paper can be viewed by clicking the link below.

http://www.fsa.gov.uk/pubs/discussion/dp08_04.pdf