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In its response to the Commission’s consultation, Insurance Europe says it supports the Commission’s objective of expanding and improving the application of proportionality in Solvency II, and the objective of achieving a level playing field and strong policyholder protection across Europe.
However, it says there is no need to harmonise insurance guarantee schemes “as Solvency II, when implemented appropriately, already offers very high and sufficient levels of protection. The focus should be on ensuring Solvency II is applied appropriately across all member states and on supervisory coordination of cross border activity.”
It points out that since systemic risk is limited for the insurance sector, any new measures should be limited to the application of the IAIS holistic framework, avoid procyclicality and should not go beyond the Commission’s call for advice. Further, it says Europe’s insurers do not support non-risk-based reductions in capital requirements as incentives to address climate change. “Addressing the measurement flaws and other barriers in Solvency II will create strong enough incentives when combined with insurers’ own natural interest and business model, together with the Commission’s powerful regulatory initiatives (e.g. the Sustainable Finance Disclosure Regulation, Taxonomy and the Non-Financial Reporting Directive) and the wider EU Green Deal,” says Insurance Europe.
It adds that two additional objectives should be added:
Ensuring the international competitiveness of the European insurance industry – other jurisdictions appear to take account of the special characteristics of insurers’ long-term business model, as well as their economic and social goals, to a greater extent in the design and calibration of their regulatory frameworks. This is something that should be reflected in the review of the framework.
Simplifying and streamlining Solvency II reporting requirements – this should be done in line with the Commission’s fitness check of supervisory reporting requirements.