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The European Commission established the Solvency II project in the early 2000s, to review and reform the rules governing direct life and non-life insurance undertakings and reinsurance undertakings operating in the European Union (EU), and to create a single, harmonised EU insurance and reinsurance market.
Insurance and reinsurance undertakings established in the territory of the UK, or which wish to become established there, that fall in scope of the Solvency II Directive, are legally obliged to comply with Solvency II rules.
The Government must ensure that UK legislation complies with Solvency II rules when they come into effect. To do this, the Government intends to make changes to the forthcoming Financial Services Act, and add freestanding provisions to sit alongside this.
The consultation seeks responses from interested parties on the way in which the Government proposes to make changes to UK legislation to comply with Solvency II rules.
There is a level of uncertainty as to the detailed practical effect of implementing the Solvency II Directive because Omnibus II, which amends aspects of the Solvency II framework Directive (Directive 2009/138/EC) will not be adopted before this consultation is complete, and the Solvency II, Level 2 text, which adds detail to the framework set out in Directive 2009/138/EC, is yet to be finalised.
Nevertheless, discussions on Omnibus II and the design of the Level 2 text have reached a stage where it is clear that the policy set out in Directive 2009/138/EC, and therefore the legislation that needs to be transposed into UK law, is sufficiently stable to allow the necessary transposition.
The Government has therefore decided to consult now on how it intends to implement Directive 2009/138/EC in order to give UK insurance and reinsurance undertakings as much certainty and clarity as possible.
The Financial Services Authority (FSA) is consulting separately on the changes it intends to make to its Regulatory Handbook in order to complete transposition of Directive 2009/138/EC into UK legislation.
The Government’s Solvency II Impact Assessment, published alongside this consultation document (please see [Annex A] below), will consider the effect the introduction of Directive 2009/138/EC will have in the round, including the changes to legislation both the Government and FSA intend to make.
HM Treasury would like to hear from all interested parties, particularly UK insurance and reinsurance firms that fall in scope of Directive 2009/138/EC.
Respondents should address any of the questions in the consultation document where they feel they can make a contribution, as well as offering any further comments they may have.
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Information provided in response to this call for evidence will be dealt with in accordance with the access to information regimes.
These are primarily the Freedom of Information Act (2000), the Data Protection Act (1998) and the Environmental Information Regulations (2004).
Please note that unless confidentiality is specifically requested, each representation has the potential to be made public.