Solvency II reforms clear major hurdle

AN influential European Parliament committee has overwhelmingly backed a draft proposal for a new capital regime for insurers, including amendments that make the new rules more industry friendly.

The 37-to-five vote makes it virtually certain the changes will survive in the final version of the so-called Solvency II regime, potentially saving insurers billions of euros, and boosts the chances of the rules taking effect on time in 2014.

The package approved yesterday represents a compromise among the biggest EU states, ensuring it will make it into final law.

It allows for the continued use of so-called matching premiums, which allow insurers to hold less capital than they would otherwise have to against annuities, products that are popular in Britain, Spain and Ireland.

The amendments were initially due to be ditched but were reinserted after a last-minute deal on 15 March.