The European Parliament has updated its procedure file, stating that it will not object to a European Commission's decision to grant "full equivalence" to the Swiss insurance regulatory regime in Solvency II.
The Commission announced in June that Switzerland was given full equivalence, in all three areas of Solvency II: solvency calculation, group supervision and reinsurance, for an indefinite period.
Solvency II is a European Commission project for implementing a harmonised solvency regime across the EU. It sets out risk management requirements for European insurers and dictates how much capital firms must hold in relation to their liabilities.
After receiving equivalence, EU insurers can use local rules to report on their operations in third countries, while third country insurers are able to operate in the EU without complying with all EU rules.
The Council of the EU has also confirmed its non-objection, in a press release on 14 July, so the delegated act can now be published in the official journal of the EU and will come into force 20 days after it is published.
Australia, Bermuda, Brazil, Canada, Mexico and the USA have been given provisional equivalence for ten years, the Commission said in June. Provisional equivalence is given when a country is expected to adopt an equivalent solvency regime "within a foreseeable future", the Commission said.
Further Solvency II equivalence decisions are expected from the Commission in future, it said.
Insurance expert Rabbani Choudhury of Pinsent Masons, the law firm behind Out-Law.com said: "It is unsurprising that Switzerland has been granted full equivalence under Solvency II. Out of all the non-EEA countries, Switzerland perhaps has the most developed and closest relationship with the EU, which it has established through a number of bilateral treaties."
"Switzerland is also recognised as a leading insurance market from where some of the huge names in insurance and reinsurance hail from, such as the Zurich’s and Swiss Res of this world. No doubt the European Parliament would have also placed weight on Switzerland’s conservative system of regulation and economic practices and policies being largely aligned to those of the EU. Overall, it is a very sensible, if not unexpected decision of the European Parliament," Choudhury said.
The Swiss Financial Market Supervisory Authority (FINMA) said in June that it welcomed the decision.
FINMA chief executive Mark Branson said: "The EU decision acknowledges the fact that Switzerland had, at an early stage, developed and implemented an up-to-date solvency system for insurers. It also recognises the effectiveness of the supervision we perform in the area of insurance."