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CEA wants probe into Solv II 'confusion'

Thursday 20 January 2011 - by Andrew Hickley

The European insurance and reinsurance federation has called for the European Commission to investigate the "confusing inconsistencies" that Solvency II will have on pensions providers.

In a statement released on Thursday afternoon, the CEA argue that with institutions for occupational retirement provision continuing to be regulated by the "cruder old system" of Solvency I while insurers move to Solvency II, customers whose pensions are with these types of funds will not benefit from the enhanced protection offered by the directive.

Worried that this will create an unlevel playing field against insurers who provide these services, the CEA "urgently calls" for both a consultation on matter and an impact assessment on the application of Solvency II-type, risk-based principles to IORPS to be conducted.

"The Solvency II principles are appropriate for pension funds, provided the economic features of all pension products or schemes are taken into consideration," claims Michaela Koller, director general of the CEA.

"The CEA believes that the principle of 'same risks, same rules' should be applied to the regulations covering life insurers, IORPs and mutual funds offering guaranteed benefits."

Described as "world's most state-of-the-art regulatory regime" by the CEA, the European Commission is currently drafting proposals for implementing Solvency II.

The directive creates a fundamental change of capital adequacy for all European insurance and reinsurance firms with gross premium income over €5m or gross technical provisions of €25m.

Once proposals are finalised, it will be rolled out into national legislation by 31 December 2012.

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