* EIOPA head writes strong letter to EU Commissioner
* Says need clarity on Solvency II timetable
* Warns of national divergence of rules, danger to consumers
* Insurers say need delay to test rules before they enforced
By Jonathan Gould
FRANKFURT, Oct 5 The European Union's powerful
insurance watchdog EIOPA on Friday blasted stagnant political
talks to finalise new risk capital rules for the insurance
sector, saying delay was undermining EU credibility
The rules, known as Solvency II, are aimed at better
protecting consumers by forcing sweeping improvement in
insurers' risk management systems and capital strength.
But the regulation is now stuck in talks between the
Commission, the European Parliament and EU national governments.
Gabriel Bernardino, chairman of the European Insurance and
Occupational Pensions Authority (EIOPA), told EU Commissioner
Michel Barnier in a letter that national supervisors had "major
worries" there was still no clear and credible timetable for the
The regulations were to go into force this month but have
now been delayed at least until 2014.
Supervisors would be left using outdated rules if EU
political institutions did not come to agreement quickly,
"If we have to continue with supervision on that basis,
there is a huge danger that supervisors will not be able to
identify and analyse risks correctly and will not be able to
take the necessary supervisory actions in time, which may have
serious consequences for policyholder protection," Bernardino
In the absence of new rules, European supervisors would be
forced to come up with their own procedures for monitoring
insurers and conflicting national solutions would emerge, he
A spokesman for Barnier said on Friday the Commissioner had
made suggestions to unlock the stalemate between the European
Parliament and national governments to win clarity on the timing
of the rules.
"The Commission remains convinced that this project needs to
be concluded as quickly as possible," spokesman Stefaan De Rynck
Big insurers like Axa or Generali are
seen as better prepared than many small insurers, which have
only just begun to grapple with the management and information
technology changes needed to comply.
Europe's biggest insurer, Allianz, declined
comment on Bernardino's letter on Friday but said a postponement
would allow insurers to test the system and resolve remaining
questions before the rules go fully into force.
Bronek Masojada, chief executive of Bermuda-based insurer
"I'd rather it be delayed and made better than have it
rammed through and have to be changed later," Masojada said.
British and Dutch insurers have a strong tradition of using
risk capital models to steer their insurance portfolios and are
seen to be ahead in preparations for Solvency II.
However, a study by accounting and consultancy firm Ernst &
Young showed that 34 percent of German, 17 percent of Italian
and 13 percent of Spanish insurers expect they would only be
ready to fulfil Solvency II requirements from 2015.
Solvency II was also seen as a potential model for insurance
supervision worldwide but Bernardino said uncertainty over the
project was "undermining EU credibility in international
Once a realistic timetable for the rules is agreed,
policymakers should consider earlier implementation of some
aspects of the rules, Bernardino said.