Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on the impact of COVID-19 on insurers.
While the pandemic has already had a significant impact on the
sector, it will take time for many of its consequences to fully
materialise. This is particularly true for claims, where a clear picture
will only become apparent in the medium to longer term. Having said
this, the European insurance industry has remained solid throughout the
pandemic, with firms generally maintaining their solvency positions. In
addition, insurers have continued to serve customers, while at the same
time launching a broad range of actions that go beyond their contractual
obligations to help clients.
COVID-19 has however presented insurance companies with unprecedented
challenges. A certain level of supervisory flexibility is therefore
crucial to enable insurers to adapt their products and services to new
market realities.
In terms of risks for the insurance sector, the industry is
particularly concerned about conclusions being drawn too fast and
inappropriate actions being proposed as a result. It is important that
the IAIS and its member supervisors adopt a long-term perspective in
their assessment of COVID-19’s impact, particularly in terms of issuing
guidelines and measures.
It should also be noted that COVID-19 posed the first real test of
the EU’s Solvency II framework. While EU insurers’ ratios remained high
and well above regulatory minimums, Solvency II measures that aim to
protect insurers from short-term market volatility failed and, in some
cases, created inexplicable exaggerated changes in the solvency position
of insurers. This has demonstrated that modifications to prudential
frameworks, in Europe and beyond, should be comprehensively tested to
ensure their effectiveness in a variety of stressed market conditions.
Finally, there is a pressing need to enhance the resilience of
economies, financial systems and societies in general. This should
include discussions about how pandemic risk can be covered in the future
and the role that insurance should play in this regard.
Response
Insurance Europe
© InsuranceEurope
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