Decisions take the form of delegated acts and concern seven countries
Last week, the first third-country equivalence decisions were adopted under Solvency II, the EU’s new prudential regulatory regime, which sets out rules to develop a single market for the insurance sector. EU insurers that have received equivalence can use local rules to report on their operations in third countries, while third-country insurers are can operate in the EU without complying with all EU rules. These equivalence decisions take the form of delegated acts and concern Switzerland, Australia, Bermuda, Brazil, Canada, Mexico and the US.
Jonathan Hill, EU commissioner for financial stability, financial services and capital markets union, said: ‘’The decisions taken [last week] will lead to more choice and competition for European consumers and also enable European insurers to compete more effectively in overseas markets. So this should be good for European businesses and the European economy.’’
Switzerland is granted full equivalence in all three areas of Solvency II: solvency calculation, group supervision and reinsurance. This decision, which is based on a report by the European Insurance and Occupational Pensions Authority (EIOPA), finds the Swiss insurance regulatory regime to be fully equivalent to Solvency II. Equivalence is granted for an indefinite period.
The other equivalence decision adopted for the other six countries covers solvency calculation and it is granted for a period of 10 years. Provisional equivalence is granted for third countries that may not meet all the criteria for full equivalence but where an equivalent solvency regime is expected to be adopted and applied by the third country within a foreseeable future.
The European Parliament and the Council now have three months to review the decision, with a possible extension by a further three months.
Further Solvency II equivalence decisions are envisaged by the European Commission in future.