LONDON After years of delay, the European Union on Wednesday agreed new rules which will from 2016 force insurers to hold enough capital to keep policyholders safe.
Lawmakers from the European Parliament and officials from member states met in Brussels on Wednesday.
"It's a good deal for the EU and for insurers," said Sharon Bowles, a British Liberal Democrat lawmaker, who took part in the negotiations.
The 8 trillion euro ($10.72 trillion) industry is likely to welcome and long-awaited clarity after major firms including Allianz (ALVG.DE), Aviva (AV.L), AXA (AXAF.PA) and Generali (GASI.MI) have invested millions of euros in preparation, including on IT systems.
Thirteen years in the making, the EU approved a version of the rules in 2009 and had been due to come into effect in 2012.
But disagreements between EU lawmakers and member states over how much capital firms must hold to cover products offering guaranteed returns over a long period have forced the bloc to delay the start date several times and amend the law before it could even take effect.
The outline of a deal emerged last month after member states put forward an alternative, weaker version of a compromise proposed by the bloc's insurance regulator on products with long-term guarantees.
Bowles, who chairs the European Parliament's influential economic and monetary affairs committee, said the "calibrations" set out in last month's member state package were kept.
This gives insurers a far more generous shield against market swings when it comes to calculating capital levels, known as a volatility dampener, than the regulator had proposed.
Insurers will get far more flexibility in how they treat swings in credit spreads than the regulator had wanted, an element known as matching adjustment.
Some elements will also be phased in over a much longer period than the regulator had proposed.
The deal on Wednesday meets the concerns of influential countries such as Germany, Britain and France, which were crucial for an agreement.
Efforts underway at the global level to agree on the world's first common insurance capital standard meant that failure by the EU to agree on Solvency II would have made it harder for the bloc to influence that process in a credible way.
($1 = 0.7460 Euro)
(Editing by G Crosse)