CEIOPS conference focuses on Solvency II and Lamfalussy

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FRANKFURT – Representatives of the European insurance and pensions industries met regulators at the third annual Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) conference in Frankfurt this week, to discuss the regulatory challenges that lie ahead.

Portuguese finance minister Carlos Costa Pina opened the conference by underlining the progress on the Lamfalussy process, with the implementation of its first, second and third levels, but emphasised the need for enhanced co-operation between CEIOPS, the Committee of European Banking Supervisors and the Committee of European Securities Regulators.

Johnny Åkerholm, chairman of the Inter-Institutional Monitoring Group (IIMG), said it was important to streamline the consultation process and cut inefficiencies in processing stakeholder input. He added that practical problems of harmonisation need to be ironed out – suggesting the possibility that Level 1 principles are too detailed and stressing the importance of the qualified voting procedure for Level 3 committees.

Panel discussions focused on Solvency II and the results of the third quantitative impact study (QIS3), which have now been published.

There were calls for a downward revision of the calibration of non-life underwriting risk, further guidance on the calculation of the solvency capital requirement and recognition of the lessons learned from the Capital Requirements Directive and the Markets in Financial Instruments Directive.

The final panel looked at the framework for occupational pensions –an area that has received much less attention than Solvency II’s insurance mandate – and the directive on institutions for occupational retirement provision (IORP).

The EU commissioner for the internal market and services, Charlie McCreevy, concluded the conference with a speech focusing on Solvency II, the Lamfalussy process and the IORP directive.

McCreevy said progress on promoting cross-border business through the IORP was obstructed by national level social and labour law requirements, obscuring whether the IORP had reached its potential.

He also stressed the challenge posed by Solvency II to the pensions industry, and said that CEIOPS had been asked to review Solvency II’s impact.

McCreevy highlighted regulatory readiness to punish non-compliance both with the IORP and the different levels of Lamfalussy implementation – while highlighting the challenges posed by the significant innovations of Level 3.

The commissioner went on to say that Level 3 compliance by European institutions needed to be enhanced by a two-step procedure. Firstly, through the production of future targets for Level 3 committees after consultation with the Ecofin council and the European Parliament, and, secondly, through Level 3 committee reports to European institutions, evaluating their performance in hitting or missing the targets set.

McCreevy said Solvency II is a “key political priority”, praising the 20% industry participation level for QIS3 and highlighting the need to maintain this level. He also noted the tight timetable set for CEIOPS to produce the draft specifications for its next quantitative impact study (QIS4) by December 20.

McCreevy pointed out the need for an effective “group support” regime for Solvency II compliance – with advice on the practical measures to ease group supervision.

“With the review of the Lamfalussy process and the Solvency II directive, we have a golden opportunity to boost the competitiveness of the European insurance sector, improve the soundness of our supervisory framework, and offer better and cheaper products to European consumers,” he said.

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