The Insurance Insider
The European insurance watchdog has declared that carriers in countries with Solvency II equivalence must be subject to the highest capital requirements in order to create parity with other international regimes.
In a note released by the organisation last week (25 September), the European Insurance and Occupational Pensions Authority (Eiopa) called for consistency between international supervisors when calculating the solvency position of insurers.
Eiopa has said that for groups operating outside the European Economic Area in countries whose solvency regimes are considered equivalent to Solvency II, the highest level of capital requirement should be applied to help achieve a level playing field.
Switzerland has been granted equivalent solvency regime status, while Australia, Bermuda (with the exception of captives), Brazil, Canada, Mexico and the US are currently awaiting a decision from the European Parliament and the Council.
Currently, capital requirements can vary from one insurance company to another thanks to different regulators’ solvency regimes, but Eiopa said this had created a competitive disadvantage for some carriers.
By adopting a consistent approach where all insurers need to have the highest required capital, Eiopa hopes to remove this hindrance.
Eiopa chairman Gabriel Bernardino said: “Supervisory convergence is an essential element in the implementation of Solvency II and is a high priority on Eiopa’s agenda. With this opinion, Eiopa intends to achieve a level playing field for the EU insurance groups by securing consistent practices by National Competent Authorities.”