Legal & General says the implementation of Solvency II for insurers could be delayed again as EU politicians negotiate changes to the final legislation.
The new rules, which will force insurers to hold more capital to cover their risks, are due to be fully implemented by insurers by 1 January 2014, a year later than the original EU proposals.
Last month, Money Marketing revealed representatives from the European Parliament, European Commission and European Council had failed to resolve outstanding issues with the reforms.
These include the so-called ‘matching adjustment, which the ABI argues should be in the final rules to prevent insurers taking account of market volatility they are not exposed to when calculating capital requirements.
At the time, the ABI warned the failure to reach agreement over the rules called into question the existing timetable for implementing the reforms.
European Parliament economic and monetary affairs committee chair Sharon Bowles said: “If we do not reach a rapid conclusion when we return from recess in September then the timetable will inevitably come under pressure.”
In its interim results, published today, L&G says: “The direction of travel on Solvency II is broadly positive, with a broad consensus now emerging about the application of a matching adjustment to categories of long-dated liabilities including UK pension annuities.
“Debate continues in Europe and Legal & General remains heavily engaged in discussion about the detail of rules and we expect implementation could be later than 2014.
“There also remains uncertainty about the final approach to how required capital is determined and the transition from the current capital regime.”
Hudson Green and Associates principal Ian Hudson says: “It is important these requirements work properly rather than being a political fudge. Getting the rules right should be the priority, not meeting a prescribed timetable.”