It took more than a decade of planning and was finally implemented in January – but now the future of Solvency II appears to be in doubt.
A UK parliamentary committee launched an inquiry into EU rules for the insurance industry on the back of the Brexit vote and outlined yesterday (September 13) that it wishes to examine Solvency II to see what options are available to UK insurers.
In a statement, Andrew Tyrie, the Conservative chairman of the committee, noted: “Brexit provides an opportunity for the UK to assume greater control of insurance regulation.”
The idea behind Solvency II was to ensure that insurance companies had strong financial buffers in place that would help them meet claims, as well as to offer a standardised approach to the European insurance markets. However, it has faced a barrage of criticism, not least for its perceived failure to secure value for money in regards to its implementation; while there has also been criticism that the rules do not truly create a level playing field and that insurers are actually at a competitive disadvantage if they look to launch in markets beyond the European Union. Now these and other areas are expected to be examined to see if improvements could potentially be made.
Of course any disruption to Solvency II could place financial firms in a difficult position as they look to sell financial services across the European Union via passporting. As such, the parliamentary committee has issued a questionnaire asking whether Solvency II is a “price worth paying for the passporting of insurance services across the EEA.”
The findings of the questionnaire are likely to shape regulatory framework for the insurance industry in the post-Brexit climate. As such, we’d like to know your thoughts on Solvency II? Should the UK insurance industry continue to adhere to its rulings post-Brexit and what are your concerns? Leave a comment below with your thoughts.
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