EIOPA Revises its Solvency II Review Timetable
The Consultation Paper on the Opinion on the 2020 Review of the Solvency II Directive was published on 15 October 2019. Following receipt of comments on the consultation paper, EIOPA published the information required from insurers and reinsurers on the impact of the draft advice for the review of Solvency II.
The insurers selected by their national supervisory authorities to take part in this review were originally asked to respond by 31 March 2020. On 17 March 2020, EIOPA announced that, in order to offer operational relief in reaction to the Covid-19 pandemic, the deadline of the information request would be extended by two months to 1 June 2020.
The new timing will allow an update of the holistic impact assessment in view of the impact of the pandemic on the financial markets and insurance and to take that impact into account in EIOPA’s advice. This strikes a balance between the need to use the opportunity of reviewing the Solvency II directive and the need for the advice to reflect the impact of the pandemic on financial markets and insurance business.
Following the collection of the holistic impact assessment, EIOPA will complement the ongoing request with a collection of data with a reference date of 30 June 2022. That more focussed request will be carried out from July to mid-September 2020 and it will only be addressed to a subset of those firms already involved in the process.
These delays mean that EIOPA will now deliver its advice on the Solvency II Review to the European Commission at the end of December 2020. It is therefore unlikely that the Commission will respond with legislative proposals before late 2021, which means that any legislative changes proposed would not be implemented until 2022.
It is unclear how the UK’s regulatory regime might evolve after the Brexit transition period. Although the UK has brought Solvency II into UK law and the PRA has indicated that it is unlikely to make any significant changes in the short term, it remains to be seen to what extent it would adopt Solvency II changes made after the transition period such as those proposed in the 2020 Review.