The European Union is close to agreeing on new rules that will force insurers to hold enough capital to keep policyholders safe, after years of delay.
Lawmakers from the European Parliament and officials from member states set aside six hours from 1430 GMT on Wednesday to nail down a deal. The bloc’s financial services chief, Michel Barnier, was due to attend in person to nudge them over the finishing line.
“We are not quite there yet, but we are very close to an agreement,” a spokeswoman for Barnier said.
“If all parties approach this week’s talks in a spirit of compromise, then it should be possible Wednesday to get a deal on this legislation, which regulators and the European industry have been waiting for.”
Sources in parliament and the insurance industry were hopeful of a deal as major firms like Allianz, Aviva, AXA and Generali have invested millions of euros in preparation, including on IT systems.
The European Union approved the so-called Solvency II law in April 2009 and it was due to come into effect in late 2012.
But disagreements between EU lawmakers and member states over how much capital firms must hold to cover products offering guaranteed returns over a long period have forced the bloc to delay the start date several times. It is now expected to take effect in January 2016.
The outline of a deal emerged last month after member states put forward an alternative, weaker version of a compromise proposed by the bloc’s insurance regulator on products with long-term guarantees.
It meets concerns of influential countries such as Germany, Britain and France, crucial for any agreement.
“It’s not ideal, but we think it’s the best we can get out of these discussions,” an insurance industry source said.
Some niggles remain, such as pressure from parliament on EU states to formally set out how they will implement the new rules and avoid room for foot-dragging.
Apart from the embarrassment of further delay, two new sources of pressure are also bearing down on the negotiators.
The legislative clock is ticking as the European Parliament holds elections in May 2014, with EU business being put on hold from March or April.
Efforts underway at the global level to agree on the world’s first common insurance capital standard mean that failure by the EU to agree on Solvency II will make it harder for the bloc to influence that process in a credible way.