EU's Barnier Aims to Delay New Insurer Rules for Customer Protection Talks

Insurance rules for companies including Allianz SE and Axa SA may be postponed by two months to allow more time to ensure they won’t hurt policyholders, the European Union’s top financial regulator said.

“We won’t introduce Solvency II without listening to stakeholders,” Financial Services Commissioner Michel Barnier said at a hearing today in Brussels. “We are going to make the most significant changes in this area for the last 30 years.”

The European Commission, the EU’s executive arm, is developing the new regulations for insurers in Europe such as Munich-based Allianz, Europe’s largest insurer, Axa, the second- biggest, and Italy’s Assicurazioni Generali SpA. The Solvency II directive is designed to align insurers’ risks with their investments and capital to protect policyholders.

Barnier said in his speech he’ll propose postponing when the rules become effective by two months “from Oct. 31, 2012 to Dec. 31, 2012” to synchronize the Solvency II timetable with the date on which the accounts of most European insurers are closed. Some insurers have called for more time to work out how to implement the rules.

“The exact introduction date of Solvency II could make a big difference for insurers,” said William Hawkins, an analyst at Keefe, Bruyette & Woods Ltd. in London. “Solvency calculations are based on year-end figures. Postponing until Dec. 31 would mean a delay of only two months, while an introduction date of Jan. 1 would mean a postponement by 14 months.”

‘Excessively prudent’

The Committee of European Insurance and Occupational Pension Supervisors, or Ceiops, is advising the EU Commission on the new rules. Some of Ceiops’s suggestions for a study scheduled to start in August have been criticized by the European insurance industry for having “excessively prudent” capital requirements.

“Ceiops will remain involved in the development and in the end of the day we’ll have a system where we can find the equilibrium,” Ceiops chairman Gabriel Bernardino said today.

Carlos Montalvo, secretary general of Frankfurt-based Ceiops, said in an interview in April that insurers may not need to raise capital as a result of the new regime. Ceiops “generally lowered” thresholds on calculating insurers’ minimum capital requirements, the agency told the EU Commission April 8 in its final advice on a fifth quantitative impact study, or QIS5.

“We welcome these changes but we are not yet where we need to be,” Michaela Koller, director general of the European insurance and reinsurance federation, CEA, said at the hearing. “There are ongoing debates on implementing the measures, the fifth impact study is a vital element in the development of the new regulatory regime.”

‘Too Conservative’

“Europe’s insurers still believe that the proposed measures are too conservative in many areas, such as those affecting the calibration of the health and non-life underwriting risks, investment in corporate bonds and insurers’ participation in banks,” Brussels-based CEA said in an e-mailed statement today.

According to the EU Commission’s Solvency II timetable, the specifications for QIS5 will be published on July 1. Insurers will then have from August until mid-November to submit their results, which Ceiops plans to publish in April 2011.

“The parliament voted for the introduction of Solvency II as it is and there is no going back,” said Peter Skinner, a U.K. Labour member of the European Parliament, who is tasked with guiding Solvency II through the legislature.

Barnier, who’s in charge of drafting financial services laws at the commission, said today he’s also considering whether Europe needs its own ratings firm to weigh the credit worthiness of countries in the wake of Greek debt crisis. His comments came at a separate meeting with European Parliament lawmakers.

To contact the reporter on this story: Oliver Suess in Munich at osuess@bloomberg.net

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