By way of background, Solvency II provides a mechanism for the European Commission to treat as equivalent a third country’s solvency and prudential regulatory regime to reflect the fact that the insurance industry is a global marketplace and the increasing cross-border nature of group structures and transactions. Equivalence findings can only be given by the European Commission once it is satisfied, having taken EIOPA’s reports and recommendations into account, that policyholders are adequately protected across jurisdictions.
In October 2011, EIOPA first provided the European Commission with three draft reports on equivalence in respect of the Bermudian, Japanese and Swiss regimes. Given the delay to the implementation timetable of Solvency II and the ongoing consultations, it came as no surprise that EIOPA was asked in February 2014 to update and refresh its analysis for these three countries. Whilst the Japanese regime’s assessment extends only to equivalence in respect of Article 172 (reinsurance supervision), the Swiss and Bermudian regimes are assessed in respect of Articles 172, 227 (group solvency calculation) and 260 (group supervision).
These latest reports from EIOPA were published on March 11, 2015 and are available here. In general, the EIOPA reports recommend, subject to certain caveats, equivalence findings for Japan, Switzerland, and Bermuda (for certain classes of Bermuda insurers). It should be noted, however, that the final decision on equivalence rests with the European Commission and the exact timing of such decision is not yet known.