European insurance and reinsurance federation, Insurance Europe, has released a report noting its stance on the advice provided by the European Insurance and Occupational Pensions Authority (EIOPA) to the European Commission on the review of the Solvency II regulatory framework.
Insurance Europe says taht EIOPA’s advice to the commission represents a missed opportunity to appropriately address the existing flaws in the framework in a way that also supports the EU’s overarching objectives set out in the Green Deal and the Capital Markets Union.
If they decide to implement EIOPA’s proposals, the risk-taking capacity of EU insurers would decrease by around €60bn and would significantly reduce insurers’ ability to invest in the real economy.
EIOPA’s advice would further amplify Solvency II’s conservativeness and measurement flaws, Insurance Europe adds, preventing the insurance industry from fully supporting the EU’s ambitious recovery, investment and sustainability goals.
The EU insurance industry is calling for the review of Solvency II to address flaws for long-term business as insurers’ capacity to invest over the long-term is based on their business model, including their ability to offer long-term products.
Addressing related flaws would allow insurers to continue offering long-term savings and guarantee products that consumers value and need. It would also enable insurers to enhance their investments in the real economy, including those in equities and assets that support the sustainable transition.
The federation also wishes to address any operational complexity and burden, which can be achieved by making sure proportionality works in practice and by simplifying and streamlining reporting requirements. This would lead to a more diversified and efficient insurance market, which is directly beneficial for European consumers.
It is also asking for a focus on areas of proven need and avoid changing what works as the Solvency II review should focus any changes in areas where there is a proven issue and should avoid changes where there is no real need, and especially avoid changes to areas that have proven their value.
