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Regarding Solvency II, while more tailored capital requirements for qualifying infrastructure assets were very much needed and welcomed, the necessary work for assessing whether a specific infrastructure asset qualifies for tailored prudential treatment is often unnecessarily extensive and resource-intensive.
Regarding potential barriers in prudential regulation to long-term investment, Insurance Europe warned that both the measurement of assets/liabilities and capital requirements can damage long-term investment, including in infrastructure. Therefore, any assessment of potential consequences should look at both areas.
A consistent accounting treatment for both assets and liabilities is key to appropriately measuring and supporting insurers’ long-term business model and investments. Therefore, the industry welcomes the alignment between the effective date of International Financial Reporting Standard (IFRS) 9 — Financial instruments — and IFRS 17 — Insurance contracts — for insurers, which is mentioned in the FSB paper.
In addition, the limited supply of suitable infrastructure assets remains a key concern for the European insurance industry and a key barrier to more investment.