Glenn Gillard, a Financial Services Partner at Deloitte, speaks about the implementation of Solvency II, Base Erosion Profit Sharing (BEPS), and conduct regulations that could affect insurers in the near future.

The final phase of preparing for Solvency II is coming to an end said. Mr. Gillard believes the current challenges surround what is going to be delivered, especially around Pillar III and quantitative reporting. On the governance side, preparations concern installing Solvency II as part of “business as usual, proving the use test and ORSA capital models.”

According to Mr. Gillard, the first few years after implementation are transitional. Companies will be getting feedback from the regulators and the model use cases…reporting will be modified to take that feedback into consideration.

Mr. Gillard says one of the big challenges is determining where the regulators are in terms of regulations. Most of the member states do not have legislation in place, so “the big challenge…is how ready are (regulators) to actually regulate.”

There is a big debate about global regulatory standards, Mr. Gillard added. How much alignment will there be between individually regulated countries and global standards? The one common glue, Mr. Gillard says, is the “concept of the ORSA, which will help with… alignment of the different country processes.”

The OECD’s Action Plan on Base Erosion Profit Sharing (BEPS) is also being debated, according to Mr. Gillard. This is going to transform where companies are domiciled and how multinationals organize their affairs from a tax perspective. “Overall…tax is falling down the list of priorities as they look at structuring and domiciles and other (priorities) moving up the list in terms of capital management, risk management .”

The next big area of regulation is going to be around “conduct risk and conduct regulation.” There is a shift towards protecting the consumer and regulators are going to be looking for ways to protect them by looking at how companies conduct risk and how products are packaged.

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