Important update from FSC on Solvency II

“Less than 500 days to go” warns the FSC

GIA has been working for some months closely with the FSC to ensure the industry moves in an orderly fashion towards full Solvency II implementation in January 2016, and the first fruits of those discussions has now been delivered.

FSC has published a Newsletter update on S2 (click on this link) which is unquestionably the most important document they have published on the subject so far.

The Newsletter sets out the principles the FSC is applying to implementation and their expectations of insurance companies over the coming months.

The most important parts are the first two annexes to the Newsletter – the first contains a timetable showing milestones on the way to 2016, separated by Pillar, and the second is a reading list of European documentation, split by Pillar and with URL links, with which the FSC expects firms to become familiar. Some of these documents are quite detailed and represent the current technical standards. Others are still in the form of consultation papers, but should give a good idea at this stage of what final measures will look like.

The FSC will continue to keep the list of EIOPA documents current, but also recommends that firms monitor EIOPA’s issuance of guidelines etc., and provides in the third annex to the Newsletter a timeline of when EIOPA expect to publish different items.

Two important points arise from the Newsletter and the recent industry seminar provided by Mazars:

1. A firm’s FLAOR and indeed the Solvency II balance sheet showing SCR MUST be submitted by 31 December 2014, however the FSC will be very pleased to receive these prior to that date, and as soon as firms can have them ready!

2. Certain firms have to complete a dry run of submitting the qualitative and quantitative information as set out in relevant EIOPA guidelines in Q2 2015. This is compulsory for larger firms and some mid-sized firms (making up 80% of the market – participating firms were notified by letter in December 2013), but others are welcome to join that process if they feel it will be useful.

The Newsletter also alludes to various industry events and workshops, which GIA is working on, along with the FSC, at the moment, and will be announced in due course.

The clock is ticking!

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