While the Commission’s proposals include a range of helpful and necessary changes, they also include elements which would undermine the improvements and/or add avoidable costs.
Insurance Europe has published its response to
the European Commission’s Better Regulation consultation on its
proposals for the review of the Solvency II regulatory framework.
While Solvency II has
provided many of its intended benefits, the framework requires
improvements as it does not correctly reflect insurers’ long-term
business model. This results in excessive capital burdens and solvency
volatility for European insurers. It has also created a very
significant, and in some cases unnecessary, operational burden for
insurers.
These deficiencies result in negative impacts for
consumers, both directly through increased costs and less optimal
investments and indirectly due to reduced product availability and
guarantees. They also constrain the insurance sector’s ability to
contribute to the EU’s political priorities.
The Solvency II
review should not lead to a fundamental overhaul of the system. Instead,
a limited number of focused changes are required that will, in
aggregate, lead to a justified and needed reduction in capital
requirements and volatility.
The right changes will make the
system more risk-based by better aligning it to the real risks faced by
insurers. This will allow the European insurance sector to maintain its
long-term business and product offering for the benefit of customers and
financial stability, to play its full role in the transition to a
sustainable economy and other EU political objectives, and to compete
internationally.
The Solvency II review should:
- Correct
the excessive capital requirements and artificial volatility for
long-term business by aligning the measurements with the real risks
faced by insurers, while keeping customers very well protected.
- Improve proportionality and avoid increasing costs and operational burden.
- Maintain the existing, well-designed supervisory ladder of intervention.
More details can be found here.
Insurance Europe
© InsuranceEurope
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article