Olav Jones, Deputy Director General of Insurance Europe, has welcomed new proposals on Solvency II by the European Commission (EC), but argued that some elements “unnecessarily increase costs and complexity” for re/insurers.
Responding to the suggestion that the proposals would enable re/insurers to further contribute to Europe’s economy, he added that a “significant and permanent” reduction of capital would be required first.
“We welcome the EC’s acknowledgement of the need for an overall reduction in insurers’ capital requirements. However, only a significant and permanent reduction of capital would allow insurers to increase their contribution to financing the recovery and supporting the EU’s Green Deal and Capital Markets Union,” Jones explained. “This is because insurers must take a long-term view in their strategy and investment decisions.”
He argued that such a capital reduction could be achieved while maintaining very high levels of protection for policyholders, and would allow the European re/insurance industry to regain international competitiveness.
“The steps that the EC has taken on proportionality seem positive,” he continued. “There are, however, concerns that the EC’s proposals for new reporting and group requirements include elements that would unnecessarily increase costs and complexity.”
“There are also significant proposals relating to recovery and resolution and we will be looking at these carefully to assess the degree to which these proposals are necessary and are aligned with internationally agreed standards.”
Jones assured that Insurance Europe would continue to assess the EC’s extensive set of proposals, but noted that the overall impact will only become clear when the EC clarifies its plans for Level 2.
