The European Union’s Economic and Financial Affairs Council has agreed to adopt a major insurance regulatory reform framework proposal.
Solvency II – the Directive on Solvency Requirements for Insurance and Reinsurance Undertakings – is a regulation that is supposed to set standards that will help European governments update existing EU insurance company capital standards and “harmonize” member countries’ insurance regulatory systems.
The European Parliament approved the directive in April.
The Economic and Financial Affairs Council and the European Parliament agreed to support a compromise version of the regulation after a single reading, according to Charlie McGreevy, the European internal market commissioner.
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McGreevy said he himself dislikes some of the changes made to the regulation, including amendments to equity risk provisions.
But “we need Solvency II more than ever as a forced response to the present financial crisis,” McGreevy said.
The European Union still must develop regulations for implementing the Solvency II standard.