Solvency II is an EU legislative programme expected to be implemented in all 28 Member States, including the UK, by 1 January 2016.
It introduces a new, harmonised EU-wide insurance regulatory regime. The legislation replaces 14 EU insurance directives.
The key objectives of Solvency II are as follows:
- Improved consumer protection: It will ensure a uniform and enhanced level of policyholder protection across the EU. A more robust system will give policyholders greater confidence in the products of insurers.
- Modernised supervision: The “Supervisory Review Process” will shift supervisors’ focus from compliance monitoring and capital to evaluating insurers’ risk profiles and the quality of their risk management and governance systems.
- Deepened EU market integration: Through the harmonisation of supervisory regimes.
- Increased international competitiveness of EU insurers.