A study on the guarantees published by the European Insurance and Occupational Pensions Authority (EIOPA) two weeks ago contained "a few positive conclusions" but its proposed solutions failed to address important problems, France's FFSA and Germany's GDV said in a joint statement on Friday.
EIOPA's proposals will feed into overarching capital rules for Europe's insurance sector, known as Solvency II, being drawn up by the European Commission. Volatile regulatory solvency ratios could prompt insurance supervisors to intervene unnecessarily in the running of an insurer or distort investors' views of the risks insurers face, industry observers say. The industry could also try to dampen its own volatility by trimming its product range or its exposure to higher-yielding assets, the latter of which could hurt investments in the economy. Europe's insurers have about €8.5 trillion ($11.05 trillion) in assets under management.
The FFSA and GDV criticised EIOPA's proposals on the yield curve to be used to calculate insurers' future liabilities, as well as the regulator's suggestions to smooth solvency ratios to take account of industry concerns. They also want the rules to deal with long-term guarantee business to be clearly written as an integral part of the Directive covering Solvency II.
The European Commission and Parliament have welcomed EIOPA's proposals as a good basis for talks starting next month between them and national governments to finalise the Solvency II rules.
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Joint Statement (in German) © GDV Gesamtverband der Deutschen Versicherungswirtschaft e.V.
© Reuters
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