Insurers still wary despite Solvency II deal ahead of vote next week

Jonathan Swift
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The European Parliament's two biggest parties have tentatively agreed to include measures related to Solvency II legislation that could save the industry billions and avoid a long delay to the rules' implementation, according to reports.

The Telegraph reported that Peter Skinner, a Labour member of the European Parliament, said the measures could shield insurers from the impact of market fluctuations and provide added protection to policyholders.

He told the paper that the deal with Burkhard Balz, a German centre-right MEP who has been steering the legislation, would allow the use of so-called 'matching premiums', which will ease the capital requirements on major UK and European insurers.

The Prudential hit the headlines recently over reports that it was threatening to leave the UK over fears concerning Solvency II and the amount of capital it would need to hold for overseas operations.

However, the Financial Times has reported that the industry is still concerned that the parliament would remove them from its negotiation position over worries that UK and Spanish insurers were receiving special treatment.

Parliament will vote on its position on Tuesday next week, before entering negotiation with member states and the European Commission to reach joint agreement.

Hugh Savill, director of prudential regulation at the Association of British Insurers, told the FT that, after weeks of uncertainty, it appeared that there was agreement that "could be a turning point" for future UK pensioners needing confidence that Solvency II would protect retirement income.

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