Many industry observers consider Solvency II to be a worthyattempt by European regulators to forge a more uniform approach tosafety and soundness supervision. Its impact extends beyond Europe:It has influenced global-standard setters at the InternationalAssociation of Insurance Supervisors and has even had an impacthere in the U.S. at the National Association of InsuranceCommissioners (NAIC).

That said, many people, particularly at the NAIC, have voicedconcerns that Solvency II so far is largely a theoretical exerciserather than a tried-and-true regulatory regime. The EuropeanCommission's willingness to develop a full regime largely on paperdiffers from the NAIC's approach of “tweaking” the U.S. regime viathe Solvency Modernization Initiative.

Moreover, timelines for the completion of Solvency II have beenextended several times—and it's fair to say that it still has along way to go before it is final.

Considering the economic uncertainty that continues to plaguethe Eurozone, insurers and regulators should be prepared forcorresponding effects on Solvency II's development andimplementation. A regulator's first and primary duty is to thelocal market, and as an appointed official, you have a boss(governors, taxpayers, etc). You are sometimes compelled to take anarrow, territorial view, which can limit any esprit decorps or cooperative arrangements among peer governments.

With this in mind, it would not be terribly surprising for moreimmediate priorities, such as those related to the European economyand the state of the single currency, to be of primary importanceto Eurozone nations.

Henry Jupe, Jean Connolly and Mary Ellen Coggins contributedto this article.