VIENNA (Reuters) - The European Union could avoid an embarrassing delay to its Solvency II capital regime for insurers by agreeing to phase in parts that have become bogged down in political wrangling, the head of its insurance regulator said on Thursday.
The new regime, originally intended to come into force this year, is aimed at making insurers hold capital in strict proportion to the risks they underwrite and is expected to usher in higher capital requirements for much of the industry.
“I think it continues to be possible to have the starting of the process on January 1, 2014, and use appropriate transition periods to deal with the situations we have under discussion,” Gabriel Bernardino, chairman of the European Insurance and Occupational Pension Authority, told reporters at a conference in Vienna.
“Of course, as time goes by ... it is becoming more challenging.”
In July, EU lawmakers and officials failed to agree a final draft of Solvency II before the European Parliament went on its summer break, pushing back a parliamentary vote on the proposals until late 2012, and putting the rest of the legislative timetable at risk.
Talks aimed at ironing out disagreements over the final shape of the rules are due to resume in Brussels next week, Bernardino said.
EU countries differ over how the capital buffer for long-term life insurance contracts should be calculated, a key consideration for the pensions industry.
Further delays to Solvency II, 10 years in the making, would anger insurers who say prolonged uncertainty over their future capital requirements has deterred investors from buying their shares.
It would also dent the international credibility of the EU, which had intended Solvency II to be a global benchmark for other countries’ rules.
Still, some insurers have complained about the cost of complying, while others fear the regime could make their overseas units less competitive against local rivals.
Reporting by Michael Shields in Vienna; Additional reporting by Myles Neligan in London; Editing by Hugh Lawson