Omnibus II-Implementation Act

After the publication of the consultation version of the Omnibus II Law, no further follow up has been given by the Ministry to contribute this legislative proposal to the reading in Dutch Parliament. The Omnibus II Directive is required to be implemented in the national laws of the EU member states by 31 March 2015. Therefore it may be expected that the legislative process with respect to the Omnibus II Law will commence shortly in the autumn of 2014. In view of the fact that legislative processes in the Netherlands take approximately 1 year from the commencement until publication of the adopted laws, it is doubtful whether the Netherlands will meet the deadline of Omnibus II.

Based on the reading of the consultation version of the Omnibus II Law, it may be concluded that this act will introduce rather significant changes to Dutch law regulating the insurance sector. Therefore an in-depth discussion of its impact is justified. We will focus hereinafter on two topics introduced by the Omnibus II Law.

Omnibus II permits the Member States to exercise four (additional) options in respect of (i) volatility adjustment to the relevant risk-free interest rate term structure, (ii) alternative calculation equity risk, (iii) solvency I capital requirements pension insurance and (iv) approval partial application of internal model by ultimate parent insurance or reinsurance undertaking.

The Netherlands will not exercise options (i) up to and including (iii) but will introduce the option of (iv) regarding partially deviating application of internal models of the (ultimate) parent and insurance company deviating from models in other parts of the group to which the parent company and insurance company belongs.

In 2014 the provision of article 3:97 AFS changed to introduce a scheme related to redemption of capital or distribution of reserves being made subject to a declaration of no-objection to be granted by DCB if an insurance company forecasts that it will not be able to meet the minimum solvency margin requirements (Solvency I levels) in the forthcoming 12 months. The language of that provision is revised to reflect the requirement to obtain a declaration of no objection for redemption of capital, distribution of reserves or distribution of dividend (emphasis on new language, CMS) in the event the insurance company forecasts that it will not be able to meet the Solvency Capital Requirements under Solvency II.