The majority of EU insurers have seen a positive effect from the EU’s 2016 Solvency II regulation, but there are still concerns over the cost of capital in the risk margin, and the impact of the regulation on long-term savings products with guarantees. This is according to a survey of insurers from across Europe by Insurance Europe.
The survey revealed that more than three quarters of the respondents have seen a positive effect from the EU’s 2016 Solvency II regulation on their risk management and governance practices and on their management of assets and liabilities, said Insurance Europe. However, 58% of the respondents offering long-term savings products with guarantees said Solvency II has had a negative effect on those products.
It also found that 48% said Solvency II has led them to invest less than optimum amounts in equities, long-term bonds, private placements or unrated debt.
Insurance Europe said the findings provide further evidence that insurers are under pressure to shift risk to customers and to withdraw from long-term guaranteed savings products.
It added that Solvency II is affecting the ability of insurers to invest long-term in the economy at a time when the European Commission is seeking to boost sustainable EU growth.
Insurance Europe president Andreas Brandstetter, CEO and chairman of UNIQA Insurance Group, said the results of the federation’s survey backed up insurers’ calls for improvements to be made to Solvency II. “The European Commission’s 2020 review of Solvency II must address the regulation’s overly conservative nature and the fact that it treats insurers as if they were short-term traders when they are, in fact, mostly long-term investors,” he said.
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