* EU lawmaker expects more flexibility in new rules
* Some parts could be phased in
* Flexibility on infrastructure investments less likely
By Huw Jones
LONDON, May 21 The European Union is nearing a
deal on long-delayed insurance rules that the bloc has touted as
a regulatory benchmark for the world to follow, regulatory and
policy officials said.
The rules, known as "Solvency II", will seek to improve the
method for deciding how much capital an insurer must hold as a
safety buffer by better assessing risks and liabilities from
A decade in the making and originally due to take effect in
late 2012, the EU rules were delayed to apply lessons from the
They hit a second speed bump when insurers in Germany,
France and Britain called for more leniency over how much
capital should be set aside for products offering guaranteed
"There is a deal on the table to be done," Peter Skinner, a
British member of the European Parliament, told Reuters on
"More has been understood about long-term guarantees so that
a far more practical approach can therefore be implemented,"
said Skinner, one of a team of lawmakers negotiating the deal
with EU member states.
He declined to say when the new rules would start, although
regulators have indicated 2016 as a possibility. Some elements
could be phased in, regarding German products for example.
"Transitions are one of the possibilities in the regulatory
tool bag," he said.
The lawmakers and member states are awaiting a report from
the European Insurance and Occupational Pensions Authority
(EIOPA) in June on the capital treatment of products with
Regulators have said that such guarantees are risky given
the likelihood of interest rates staying very low for a long
period, hitting investment returns used to pay out on policies.
But Skinner said he expects the review by EIOPA, the
pan-European insurance regulator, to show how national insurance
markets differ and to highlight problems that could arise in a
low-interest rate economy if rules are too narrow.
Separately on Tuesday, Justin Wray, EIOPA's head of policy,
told an Insurance Day conference that more confident signals
were emerging from the European Parliament over the rules.
"We believe it will happen. The signs are much better than
in the past for an agreement," Wray said.
Skinner said the mood among lawmakers was for a political
deal well before the parliamentary elections in June 2014, with
the assembly's work tailing off weeks before then.
Top insurers have spent millions of euros preparing for the
new rules. The delay has raised the hackles of UK regulators and
led to concerns that they may never take effect.
While facing intense pressure to be flexible on
guaranteed-return products, EIOPA signalled on Tuesday it would
stand firm in the face of calls to ease capital requirements on
investments in infrastructure projects.
Cash-strapped governments are looking to insurers to invest
in new roads and transport networks, but may be disappointed.
"We are genuinely open-minded about what is the right
capital requirement. For the most part ... the evidence is not
there for making recommendations to change capital
requirements," Wray said.
EIOPA will report on the issue in July.