Jeremy Woolfe speaks with Brussels insiders on the significance of the Omnibus II agreement
Draft agreements reached in Brussels over Solvency II issues are likely to spin off into the occupational pension field, probably by 2020, according to a key Brussels pensions figure.
The agreement to the Omnibus II legislative package was achieved in a late-night session bringing together the EU national governments, the European Parliament and the European Commission.
The legislation is aimed at the insurance sector, but it is logical to suppose that occupational pensions – which can be described as a parallel sector – would eventually be “infected”, according to Chris Verhaegen.
Thus, it is also reasonable to interpret the agreement as letting occupational pensions off tightened Solvency II or holistic balance sheet (HBS) capital adequacy rules until 1 January 2020, she believes, citing the ‘level playing field’ argument.
The former chairman of the stakeholders group at EIOPA told IPE the agreement to delay capital adequacy rules for the life insurance part of insurance was achieved under pressure from, for example, France.
A separate source speaks of the country’s well-known position on non-compliance with the IORPs Directive.
Verhaegen herself says the trilogue’s relaxation makes it clear France has been “listened to”.
The trilogue consensus, which is planned to be in force for the insurance sector in 2016, sets the sector’s life insurance component to be excused from certain IORP Directive rules until 31 December 2019.
It means that exclusion measures set out in Article 4 of the existing 2003 occupational pensions Directive may continue in force for another six years.
The Article states that: “In such case, and only as far as their occupational retirement provision business is concerned, insurance undertakings shall not be subject to Articles 20 to 26, 31 and 36 of [the life insurance] Directive”.
However, according to Verhaegen, this is a member state option, and it is restricted to occupational pensions.
The deal, which is described as “provisional”, was reached after eight hours of tense negotiations in Brussels.
It took until 11.30pm under the chairmanship of British liberal MEP, Sharon Bowles.
Bowles says the outcome makes for “a good day” for the European insurance industry, for the European Insurance and Occupational Pensions Authority (EIOPA) and for the European Parliament.
“This agreement opens the door for EIOPA to take on responsibility for the regulation of the European insurance industry as envisaged by MEPs when EIOPA was originally created,” she says.
As for reaction from PensionsEurope, it is cautiously holding back on comment, at least for the time being.
Its head, Matti Leppälä, told IPE he would first like to see the “consolidated” text report of the trilogue agreement.
This, in fact, requires clearance by the European Parliament, in plenary session.
Here, the provisional date for this sitting is not until February 2014.
In other words, expect further debate, no doubt mainly behind closed doors.
Omnibus II’s “progress” follows delay after delay for its Solvency II predecessor.
On an optimistic note, EIOPA’s chairman, Gabriel Bernardino welcomes the trilogue agreement, saying it will contribute to the strengthening of insurance supervision.
As for the Nordics, a Brussels source says there have been discussions between Sweden and the EU institutions earlier this year on gearing up compliance over occupational pensions rules.
German Green MEP Sven Giegold, a financial expert held in high esteem across party lines, quips: “Years of intensive lobbying have paid off for the insurance companies of the largest member states.”
He adds: “The package provides a capital relief of an incredible €267bn. For life insurance alone, the relief is €264bn. Life insurers will be allowed to hold, under Solvency II, capital of just 4.5% of their assets.”