Industry Backs Jersey's Solvency II Decision

by Robin Pilgrim, LawAndTax-News.com, London

29 July 2011

The Jersey Financial Services Commission has released a statement outlining its position with regard to the capital standard for insurance and reinsurance companies, Solvency II, which is expected to be introduced in the European Union in 2013.

The Commission has previously sought input from those in the insurance sector in Jersey who would be affected by changes to regulatory capital requirements applied in the island. This dialogue, the Commission said, did not identify any regulatory or other reason for implementing Solvency II in Jersey.

"Whilst the Commission will continue to monitor the development of Solvency II, [the Commission] will predominantly focus on changes to the international standards set by the International Association of Insurance Supervisors (IAIS), which are due to be adopted later this year. It is these standards against which Jersey has previously been assessed by the International Monetary Fund."

The revised IAIS standards, which include provisions for risk based solvency, are to be considered by the Commission, once finalized. The need to make consequential changes to Jersey’s insurance regulatory requirements and the impact of such, will then be assessed, the Commission disclosed.

Any proposed changes will be subject to public consultation, the Commission confirmed.

Solvency II aims to establish a revised set of EU-wide capital requirements and risk management standards, which will replace current solvency requirements. The implementation date is set for January, 2013, with Solvency II to be adopted by each of the 27 EU member states, plus three of the European Economic Area countries. It will apply to those insurance firms with gross premium incomes exceeding EUR5m, or with gross technical provisions surpassing EUR25m.

Neighbouring Guernsey, Europe's largest captive insurance domicile, has also decided not to seek equivalence under Solvency II. Neither jurisdiction is part of the EU.

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