The group has taken action to get companies and regulators ready for broad scale changes.
This week, the European Union’s insurance industry watchdog took considerable action to begin the preparations of insurers as well as national regulators, for the implementation of new regulations that will lead to widespread changes to their risk and capital management.
The EIOPA issued a draft of the guidelines that it is recommending for a number of insurer functions.
The European Insurance and Occupational Pensions Authority (EIOPA) released its guidelines draft for the insurance industry, which covered the systems of governance, reporting procedures, risk assessments, as well as the process for receiving approval of individual capital models by national regulators. The goal of the watchdog organization is to officially implement its guidelines as of January 1, 2014. However, a number of the elements of its regulations will be phased in following that specific deadline.
The insurance industry guidelines are a partial response to political delays to finalize their own regulations.
The EIOPA has responded, in part, to political delays in the finalizing of a complete risk capital rule set for the insurance industry, which is referred to as Solvency II. Those, however, may not be implemented until 2017 or afterward. Those regulations have been in the works for a decade and are still not complete. Therefore, the EIOPA has, partially for this reason, produced its own guidelines so that insurers will have more much needed direction.
The EIOPA chairman, Gabriel Bernardino said that it would be possible for Solvency II to enjoy an earlier start if the member states of the EU, the European Commission, and parliament could come to an agreement regarding the various elements of the regulation within 2013. He explained to the press that “I still believe it will be possible to have the system start … on January 1, 2016.”
The insurance industry guidelines are still open to the public for comment until June 19, 2013. According to Bernardino, the guidelines should work to encourage insurers and regulators to take action. He stated that “We want concrete steps from the different types of companies so that when Solvency II will start to be implemented, we can say that we have done all we could to get supervisors and companies prepared.”