Five years of <em>InsuranceERM</em>, five years on the tortuous journey towards Solvency II

By Peter Field

InsuranceERM was launched five years ago, in November 2008, when implementation of Solvency II was less than four years away. Now, it's still over two years away and a lot of water has passed under the bridge. Delving into the InsuranceERM archives, Peter Field charts the ebbs and flows on the way to the European Parliament vote last week for a January 2016 go-live date for Solvency II

When I started InsuranceERM in November 2008, somebody told me that I'd left it a bit late if I wanted to get the most out of covering Solvency II.

But I thought that the scope of the proposed regulation, like Basel II and then Basel III, was so far-reaching that even if the deadline of 31 October 2012 were met, there would be plenty of implementation issues and loose ends to provide copy for years.

As it's turned out, we're nowhere near Solvency III; indeed, transitional measures in the deal agreed last week in Europe mean complete implementation won't happen till 2032. I should have realised that one of our first stories in November 2008, "Solvency II schedule slips," was a precursor of many more delays.

Of course, InsuranceERM hasn't just been about Solvency II, which is why that is not part of the title (which was originally Insurance Risk and Capital.) The thinking behind Solvency II is part of global trend to more sophisticated and holistic risk management by insurers.

Some countries are already ahead of the EU in their adoption of this approach. Hence, InsuranceERM has reported on the Swiss Solvency Test, Australia's Lagic standards, South Africa's Solvency Assessment and Management (SAM) project (due to be fully implemented in 2016) and the US ORSA (due in 2015.) Features on Latin America and Asia, as well as "Solvency II goes global" also attest to the propagation of the enterprise risk management gospel.

But Solvency II has undoubtedly dominated our content in the past five years, and the distillation of our news items on this subject that follows gives a flavour of the arguments, negotiations and compromises which led last week to Europe setting a firm date for the new insurance framework.

Delays and consultations

Solvency II schedule slips - 28 November 2008

The European Parliament's plenary vote on the draft Solvency II directive has been pushed back to 3 February 2009, according to a source at the Parliament... The vote was originally scheduled for 3 December 2008.

Solvency II "will most likely be delayed" - 17 February 2009

At last, a Solvency II compromise is agreed - 26 March 2009

European Parliament votes for Solvency II - 23 April 2009

The European Parliament has formally voted to approve the Solvency II level one directive text, after months of negotiations.

Consultation on level two implementation announced - 4 June 2009

Insurers underestimating cost of Solvency II? - 15 July 2009

A survey reveals that 61% of UK insurers believe that the cost of implementing Solvency II will be less than £500,000, with a further 8% still having no idea of the cost.

CEIOPS completes level 2 advice - 30 November 2009

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) today published consultation paper 78 on the criteria for third country equivalence under Solvency II.

QIS5 taskforce created - 28 January 2010

CEIOPS launches level three guidance - 28 January 2010

Postponing Solvency II implementation – first time – and QIS5

EC looking at 2013 Solvency II start date - 17 March 2010

EC's QIS5 draft is big relief for insurance industry - 16 April 2010

CEIOPS reports 70% participation in QIS5 - 16 December 2010

QIS5 results in 44% drop in insurers' capital surplus - 14 March 2011

QIS5 has resulted in a reduction of insurers' and reinsurers' capital surplus of 44%,or €86bn, compared to the calculation under Solvency I, according to the report issued today by the European Insurance and Occupational Pensions Authority.