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The Council, supported by the European Commission (EC), wants to extend the package of measures, which include the matching adjustment, to life morbidity insurance products, such as medical insurance.
The move prevented an agreement being reached on Omnibus II before the European Parliament's summer recess. It also threatens to jeopardise the compromise already reached between the parliament and the Council on the measures to support annuities and other long-term life products, according to Sharon Bowles, chair of the European Parliament's Economic and Monetary Affairs committee (ECON).
"We got to a point where we were in agreement on a compromise for all sides vis-à-vis how [the package of measures] applied to life products but then the Council came back saying we want some of this for a similar type of non-product, such as life morbidity insurance", says Bowles in an interview with Insurance Risk.
"We are still trying work out what to do with that aspect because without that it may be there is no longer a majority on the Council side for the agreement on the life part", she adds.
Life morbidity products, covering policyholders in the event of ill-health, are not sold widely by mainstream insurers, but a number of smaller participants "will have a big interest in the outcome", says Rob Jones, managing director in financial services ratings, Europe, at Standard & Poor's in London.
The current principles underlying the proposals for long-term guarantees have scope for expansion, he says. "There were some principles underlying the proposals, which mainly affect UK and Spanish annuities at the moment. I can see those principles being extended and reused elsewhere where appropriate", Jones adds.
A spokesperson for the EC says it was vital that the package of long-term measures reflects the diverse range of insurance products that exist throughout the European Union, avoiding any possible distortion of competition in the single market. "We hope a solution can be found that is satisfactory to both co-legislators", the spokesperson adds.
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